Correlation Between National Beverage and Citizens Bancorp

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

Diversification Opportunities for National Beverage and Citizens Bancorp

-0.46

Correlation Coefficient

National Beverage  Citizens Bancorp

Very good diversification

The 3 months correlation between National and Citizens is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of National Beverage i.e., National Beverage and Citizens Bancorp go up and down completely randomly.

Pair Corralation between National Beverage and Citizens Bancorp

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Citizens Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.07 times less risky than Citizens Bancorp. The stock trades about -0.05 of its potential returns per unit of risk. The Citizens Bancorp Investment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,382  in Citizens Bancorp Investment on October 9, 2024 and sell it today you would earn a total of  268.00  from holding Citizens Bancorp Investment or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

National Beverage Corp  vs.  Citizens Bancorp Investment

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.

Citizens Bancorp Inv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Citizens Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with National Beverage and Citizens Bancorp

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

The idea behind National Beverage Corp and Citizens Bancorp Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.