Correlation Between National Beverage and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both National Beverage and Burlington Stores 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 Burlington Stores 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 Burlington Stores, you can compare the effects of market volatilities on National Beverage and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Burlington Stores.
Diversification Opportunities for National Beverage and Burlington Stores
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Burlington is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of National Beverage i.e., National Beverage and Burlington Stores go up and down completely randomly.
Pair Corralation between National Beverage and Burlington Stores
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Burlington Stores. In addition to that, National Beverage is 1.25 times more volatile than Burlington Stores. It trades about -0.12 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.01 per unit of volatility. If you would invest 27,200 in Burlington Stores on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Burlington Stores or generate 0.0% 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. Burlington Stores
Performance |
Timeline |
National Beverage Corp |
Burlington Stores |
National Beverage and Burlington Stores Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Beverage and Burlington Stores
The main advantage of trading using opposite National Beverage and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.National Beverage vs. The Coca Cola | National Beverage vs. Monster Beverage Corp | National Beverage vs. Keurig Dr Pepper | National Beverage vs. Coca Cola European Partners |
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Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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