Correlation Between National Beverage and SPARTAN STORES

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

Diversification Opportunities for National Beverage and SPARTAN STORES

-0.29

Correlation Coefficient

National Beverage  SPARTAN STORES

Very good diversification

The 3 months correlation between National and SPARTAN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of National Beverage i.e., National Beverage and SPARTAN STORES go up and down completely randomly.

Pair Corralation between National Beverage and SPARTAN STORES

Assuming the 90 days horizon National Beverage Corp is expected to generate 0.88 times more return on investment than SPARTAN STORES. However, National Beverage Corp is 1.14 times less risky than SPARTAN STORES. It trades about -0.15 of its potential returns per unit of risk. SPARTAN STORES is currently generating about -0.32 per unit of risk. If you would invest  4,420  in National Beverage Corp on October 17, 2024 and sell it today you would lose (180.00) from holding National Beverage Corp or give up 4.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

National Beverage Corp  vs.  SPARTAN STORES

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES 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 forward-looking indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with National Beverage and SPARTAN STORES

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

The idea behind National Beverage Corp and SPARTAN STORES 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.

Check out your portfolio center.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.