Correlation Between AGF Management and National Beverage

Can any of the company-specific risk be diversified away by investing in both AGF Management and National Beverage 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 AGF Management and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGF Management Limited and National Beverage Corp, you can compare the effects of market volatilities on AGF Management and National Beverage 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 AGF Management with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and National Beverage.

Diversification Opportunities for AGF Management and National Beverage

0.09

Correlation Coefficient

AGF Management  National Beverage

Significant diversification

The 3 months correlation between AGF and National is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and AGF Management 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 AGF Management Limited are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of AGF Management i.e., AGF Management and National Beverage go up and down completely randomly.

Pair Corralation between AGF Management and National Beverage

Assuming the 90 days horizon AGF Management Limited is expected to generate 1.42 times more return on investment than National Beverage. However, AGF Management is 1.42 times more volatile than National Beverage Corp. It trades about -0.01 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.11 per unit of risk. If you would invest  693.00  in AGF Management Limited on December 27, 2024 and sell it today you would lose (23.00) from holding AGF Management Limited or give up 3.32% of portfolio value over 90 days.

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

AGF Management Limited  vs.  National Beverage Corp

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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 AGF Management and National Beverage

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

The idea behind AGF Management Limited and National Beverage Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.