Correlation Between National Beverage and Arhaus

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

Diversification Opportunities for National Beverage and Arhaus

-0.16

Correlation Coefficient

National Beverage  Arhaus

Good diversification

The 3 months correlation between National and Arhaus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of National Beverage i.e., National Beverage and Arhaus go up and down completely randomly.

Pair Corralation between National Beverage and Arhaus

Given the investment horizon of 90 days National Beverage is expected to generate 4.18 times less return on investment than Arhaus. But when comparing it to its historical volatility, National Beverage Corp is 1.99 times less risky than Arhaus. It trades about 0.01 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  912.00  in Arhaus Inc on September 14, 2024 and sell it today you would earn a total of  170.00  from holding Arhaus Inc or generate 18.64% return on investment over 90 days.

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

National Beverage Corp  vs.  Arhaus Inc

National Beverage Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National Beverage and Arhaus

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

The idea behind National Beverage Corp and Arhaus Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.