Correlation Between National Beverage and AECOM TECHNOLOGY

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

Diversification Opportunities for National Beverage and AECOM TECHNOLOGY

0.8

Correlation Coefficient

National Beverage  AECOM TECHNOLOGY

Very poor diversification

The 3 months correlation between National and AECOM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of National Beverage i.e., National Beverage and AECOM TECHNOLOGY go up and down completely randomly.

Pair Corralation between National Beverage and AECOM TECHNOLOGY

Assuming the 90 days horizon National Beverage is expected to generate 4.77 times less return on investment than AECOM TECHNOLOGY. In addition to that, National Beverage is 1.01 times more volatile than AECOM TECHNOLOGY. It trades about 0.02 of its total potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.09 per unit of volatility. If you would invest  9,526  in AECOM TECHNOLOGY on October 10, 2024 and sell it today you would earn a total of  774.00  from holding AECOM TECHNOLOGY or generate 8.13% return on investment over 90 days.

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

National Beverage Corp  vs.  AECOM TECHNOLOGY

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.

AECOM TECHNOLOGY

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with National Beverage and AECOM TECHNOLOGY

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

The idea behind National Beverage Corp and AECOM TECHNOLOGY 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.