Correlation Between National Beverage and Ameritrans Capital

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

Diversification Opportunities for National Beverage and Ameritrans Capital

0.65

Correlation Coefficient

National Beverage  Ameritrans Capital

Poor diversification

The 3 months correlation between National and Ameritrans is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Ameritrans Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrans Capital Corp 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 Ameritrans Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrans Capital Corp has no effect on the direction of National Beverage i.e., National Beverage and Ameritrans Capital go up and down completely randomly.

Pair Corralation between National Beverage and Ameritrans Capital

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.3 times more return on investment than Ameritrans Capital. However, National Beverage Corp is 3.37 times less risky than Ameritrans Capital. It trades about 0.0 of its potential returns per unit of risk. Ameritrans Capital Corp is currently generating about -0.06 per unit of risk. If you would invest  4,355  in National Beverage Corp on October 9, 2024 and sell it today you would lose (67.00) from holding National Beverage Corp or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

National Beverage Corp  vs.  Ameritrans Capital Corp

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ameritrans Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameritrans Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with National Beverage and Ameritrans Capital

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

The idea behind National Beverage Corp and Ameritrans Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.