Correlation Between National Beverage and Prosiebensat

Can any of the company-specific risk be diversified away by investing in both National Beverage and Prosiebensat 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 Prosiebensat 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 Prosiebensat 1 Media, you can compare the effects of market volatilities on National Beverage and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Prosiebensat.

Diversification Opportunities for National Beverage and Prosiebensat

-0.77

Correlation Coefficient

National Beverage  Prosiebensat

Pay attention - limited upside

The 3 months correlation between National and Prosiebensat is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of National Beverage i.e., National Beverage and Prosiebensat go up and down completely randomly.

Pair Corralation between National Beverage and Prosiebensat

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.61 times less risky than Prosiebensat. The stock trades about -0.04 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Prosiebensat 1 Media on September 16, 2024 and sell it today you would earn a total of  61.00  from holding Prosiebensat 1 Media or generate 12.3% return on investment over 90 days.

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

National Beverage Corp  vs.  Prosiebensat 1 Media

National Beverage Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Prosiebensat 1 Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Prosiebensat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National Beverage and Prosiebensat

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

The idea behind National Beverage Corp and Prosiebensat 1 Media 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.