Correlation Between National Beverage and Ark Restaurants

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

Diversification Opportunities for National Beverage and Ark Restaurants

-0.56

Correlation Coefficient

National Beverage  Ark Restaurants

Excellent diversification

The 3 months correlation between National and Ark is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of National Beverage i.e., National Beverage and Ark Restaurants go up and down completely randomly.

Pair Corralation between National Beverage and Ark Restaurants

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Ark Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 5.14 times less risky than Ark Restaurants. The stock trades about -0.27 of its potential returns per unit of risk. The Ark Restaurants Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,129  in Ark Restaurants Corp on October 21, 2024 and sell it today you would earn a total of  262.00  from holding Ark Restaurants Corp or generate 23.21% return on investment over 90 days.

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

National Beverage Corp  vs.  Ark Restaurants 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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ark Restaurants Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Ark Restaurants

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

The idea behind National Beverage Corp and Ark Restaurants 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.