Correlation Between National Beverage and PACCAR

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

Diversification Opportunities for National Beverage and PACCAR

-0.06

Correlation Coefficient

National Beverage  PACCAR

Good diversification

The 3 months correlation between National and PACCAR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of National Beverage i.e., National Beverage and PACCAR go up and down completely randomly.

Pair Corralation between National Beverage and PACCAR

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the PACCAR. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.09 times less risky than PACCAR. The stock trades about -0.17 of its potential returns per unit of risk. The PACCAR Inc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  10,079  in PACCAR Inc on December 20, 2024 and sell it today you would lose (941.00) from holding PACCAR Inc or give up 9.34% of portfolio value over 90 days.

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

National Beverage Corp  vs.  PACCAR Inc

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PACCAR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACCAR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with National Beverage and PACCAR

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

The idea behind National Beverage Corp and PACCAR Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.