Correlation Between National Beverage and GWILLI FOOD

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

Diversification Opportunities for National Beverage and GWILLI FOOD

0.34

Correlation Coefficient

National Beverage  GWILLI FOOD

Weak diversification

The 3 months correlation between National and GWILLI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of National Beverage i.e., National Beverage and GWILLI FOOD go up and down completely randomly.

Pair Corralation between National Beverage and GWILLI FOOD

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the GWILLI FOOD. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.26 times less risky than GWILLI FOOD. The stock trades about -0.22 of its potential returns per unit of risk. The GWILLI FOOD is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,450  in GWILLI FOOD on October 10, 2024 and sell it today you would earn a total of  100.00  from holding GWILLI FOOD or generate 6.9% return on investment over 90 days.

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

National Beverage Corp  vs.  GWILLI FOOD

National Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

GWILLI FOOD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and GWILLI FOOD

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

The idea behind National Beverage Corp and GWILLI FOOD 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.