Correlation Between National Beverage and Oakley Capital

Can any of the company-specific risk be diversified away by investing in both National Beverage and Oakley Capital 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 Oakley Capital 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 Oakley Capital Investments, you can compare the effects of market volatilities on National Beverage and Oakley Capital 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 Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Oakley Capital.

Diversification Opportunities for National Beverage and Oakley Capital

-0.4

Correlation Coefficient

National Beverage  Oakley Capital

Very good diversification

The 3 months correlation between National and Oakley is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of National Beverage i.e., National Beverage and Oakley Capital go up and down completely randomly.

Pair Corralation between National Beverage and Oakley Capital

Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Oakley Capital. In addition to that, National Beverage is 1.57 times more volatile than Oakley Capital Investments. It trades about -0.08 of its total potential returns per unit of risk. Oakley Capital Investments is currently generating about 0.0 per unit of volatility. If you would invest  49,800  in Oakley Capital Investments on October 26, 2024 and sell it today you would lose (300.00) from holding Oakley Capital Investments or give up 0.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

National Beverage Corp  vs.  Oakley Capital Investments

National Beverage Corp

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oakley Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Beverage and Oakley Capital

The main advantage of trading using opposite National Beverage and Oakley Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Oakley Capital 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 Oakley Capital will offset losses from the drop in Oakley Capital's long position.

The idea behind National Beverage Corp and Oakley Capital Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.