Correlation Between National Beverage and HYATT HOTELS

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

Diversification Opportunities for National Beverage and HYATT HOTELS

0.63

Correlation Coefficient

National Beverage  HYATT HOTELS

Poor diversification

The 3 months correlation between National and HYATT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A 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 HYATT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of National Beverage i.e., National Beverage and HYATT HOTELS go up and down completely randomly.

Pair Corralation between National Beverage and HYATT HOTELS

Assuming the 90 days horizon National Beverage is expected to generate 6.15 times less return on investment than HYATT HOTELS. In addition to that, National Beverage is 1.09 times more volatile than HYATT HOTELS A. It trades about 0.01 of its total potential returns per unit of risk. HYATT HOTELS A is currently generating about 0.06 per unit of volatility. If you would invest  10,727  in HYATT HOTELS A on October 3, 2024 and sell it today you would earn a total of  4,363  from holding HYATT HOTELS A or generate 40.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

National Beverage Corp  vs.  HYATT HOTELS A

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. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HYATT HOTELS A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYATT HOTELS A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HYATT HOTELS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and HYATT HOTELS

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

The idea behind National Beverage Corp and HYATT HOTELS A 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.