Correlation Between National Beverage and SOLSTAD OFFSHORE

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

Diversification Opportunities for National Beverage and SOLSTAD OFFSHORE

0.57

Correlation Coefficient

National Beverage  SOLSTAD OFFSHORE

Very weak diversification

The 3 months correlation between National and SOLSTAD is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of National Beverage i.e., National Beverage and SOLSTAD OFFSHORE go up and down completely randomly.

Pair Corralation between National Beverage and SOLSTAD OFFSHORE

Assuming the 90 days horizon National Beverage Corp is expected to under-perform the SOLSTAD OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 2.97 times less risky than SOLSTAD OFFSHORE. The stock trades about -0.03 of its potential returns per unit of risk. The SOLSTAD OFFSHORE NK is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  282.00  in SOLSTAD OFFSHORE NK on September 22, 2024 and sell it today you would earn a total of  54.00  from holding SOLSTAD OFFSHORE NK or generate 19.15% return on investment over 90 days.

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

National Beverage Corp  vs.  SOLSTAD OFFSHORE NK

National Beverage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 5 (%) 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.

SOLSTAD OFFSHORE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SOLSTAD OFFSHORE NK are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and SOLSTAD OFFSHORE

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

The idea behind National Beverage Corp and SOLSTAD OFFSHORE NK 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.