Correlation Between National Beverage and Performance Food

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

Diversification Opportunities for National Beverage and Performance Food

0.2

Correlation Coefficient

National Beverage  Performance Food

Modest diversification

The 3 months correlation between National and Performance is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of National Beverage i.e., National Beverage and Performance Food go up and down completely randomly.

Pair Corralation between National Beverage and Performance Food

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Performance Food. In addition to that, National Beverage is 1.14 times more volatile than Performance Food Group. It trades about -0.21 of its total potential returns per unit of risk. Performance Food Group is currently generating about -0.09 per unit of volatility. If you would invest  8,300  in Performance Food Group on November 28, 2024 and sell it today you would lose (600.00) from holding Performance Food Group or give up 7.23% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Performance Food Group

National Beverage Corp

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National Beverage and Performance Food

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

The idea behind National Beverage Corp and Performance Food 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.