Correlation Between National Beverage and Commercial Vehicle

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

Diversification Opportunities for National Beverage and Commercial Vehicle

-0.72

Correlation Coefficient

National Beverage  Commercial Vehicle

Pay attention - limited upside

The 3 months correlation between National and Commercial is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of National Beverage i.e., National Beverage and Commercial Vehicle go up and down completely randomly.

Pair Corralation between National Beverage and Commercial Vehicle

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Commercial Vehicle. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.34 times less risky than Commercial Vehicle. The stock trades about -0.22 of its potential returns per unit of risk. The Commercial Vehicle Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Commercial Vehicle Group on October 10, 2024 and sell it today you would lose (6.00) from holding Commercial Vehicle Group or give up 2.7% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Commercial Vehicle Group

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.

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Beverage and Commercial Vehicle

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

The idea behind National Beverage Corp and Commercial Vehicle Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.