Correlation Between National Beverage and Borealis Foods

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

Diversification Opportunities for National Beverage and Borealis Foods

-0.59

Correlation Coefficient

National Beverage  Borealis Foods

Excellent diversification

The 3 months correlation between National and Borealis is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Borealis Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Foods 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 Borealis Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Foods has no effect on the direction of National Beverage i.e., National Beverage and Borealis Foods go up and down completely randomly.

Pair Corralation between National Beverage and Borealis Foods

Given the investment horizon of 90 days National Beverage is expected to generate 33.15 times less return on investment than Borealis Foods. But when comparing it to its historical volatility, National Beverage Corp is 6.53 times less risky than Borealis Foods. It trades about 0.01 of its potential returns per unit of risk. Borealis Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7.11  in Borealis Foods on October 21, 2024 and sell it today you would earn a total of  3.89  from holding Borealis Foods or generate 54.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.36%
Values	Daily Returns

National Beverage Corp  vs.  Borealis Foods

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 inconsistent 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.

Borealis Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Borealis Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Borealis Foods

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

The idea behind National Beverage Corp and Borealis Foods 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.