Correlation Between National Beverage and Clean Power

Can any of the company-specific risk be diversified away by investing in both National Beverage and Clean Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Beverage and Clean Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Beverage Corp and Clean Power Hydrogen, you can compare the effects of market volatilities on National Beverage and Clean Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Beverage with a short position of Clean Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Clean Power.

Diversification Opportunities for National Beverage and Clean Power

0.48

Correlation Coefficient

National Beverage  Clean Power

Very weak diversification

The 3 months correlation between National and Clean is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Clean Power Hydrogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Power Hydrogen and National Beverage is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Beverage Corp are associated (or correlated) with Clean Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Power Hydrogen has no effect on the direction of National Beverage i.e., National Beverage and Clean Power go up and down completely randomly.

Pair Corralation between National Beverage and Clean Power

Assuming the 90 days trading horizon National Beverage Corp is expected to generate 0.8 times more return on investment than Clean Power. However, National Beverage Corp is 1.25 times less risky than Clean Power. It trades about -0.12 of its potential returns per unit of risk. Clean Power Hydrogen is currently generating about -0.13 per unit of risk. If you would invest  4,542  in National Beverage Corp on December 23, 2024 and sell it today you would lose (584.00) from holding National Beverage Corp or give up 12.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

National Beverage Corp  vs.  Clean Power Hydrogen

National Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Clean Power Hydrogen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Power Hydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Beverage and Clean Power

The main advantage of trading using opposite National Beverage and Clean Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Clean Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clean Power will offset losses from the drop in Clean Power's long position.

The idea behind National Beverage Corp and Clean Power Hydrogen pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.