Correlation Between National Beverage and Commerzbank
Can any of the company-specific risk be diversified away by investing in both National Beverage and Commerzbank 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 Commerzbank 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 Commerzbank AG, you can compare the effects of market volatilities on National Beverage and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Commerzbank.
Diversification Opportunities for National Beverage and Commerzbank
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Commerzbank is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of National Beverage i.e., National Beverage and Commerzbank go up and down completely randomly.
Pair Corralation between National Beverage and Commerzbank
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the Commerzbank. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.21 times less risky than Commerzbank. The stock trades about -0.18 of its potential returns per unit of risk. The Commerzbank AG is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,570 in Commerzbank AG on October 22, 2024 and sell it today you would earn a total of 160.00 from holding Commerzbank AG or generate 10.19% 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. Commerzbank AG
Performance |
Timeline |
National Beverage Corp |
Commerzbank AG |
National Beverage and Commerzbank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Beverage and Commerzbank
The main advantage of trading using opposite National Beverage and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.National Beverage vs. PLAYTECH | National Beverage vs. SLR Investment Corp | National Beverage vs. CHRYSALIS INVESTMENTS LTD | National Beverage vs. TRAVEL LEISURE DL 01 |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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