Correlation Between National Beverage and Chemours

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

Diversification Opportunities for National Beverage and Chemours

0.63

Correlation Coefficient

National Beverage  Chemours

Poor diversification

The 3 months correlation between National and Chemours is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of National Beverage i.e., National Beverage and Chemours go up and down completely randomly.

Pair Corralation between National Beverage and Chemours

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.47 times more return on investment than Chemours. However, National Beverage Corp is 2.13 times less risky than Chemours. It trades about -0.06 of its potential returns per unit of risk. Chemours Co is currently generating about -0.05 per unit of risk. If you would invest  5,075  in National Beverage Corp on September 25, 2024 and sell it today you would lose (639.00) from holding National Beverage Corp or give up 12.59% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Chemours Co

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.

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chemours is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Beverage and Chemours

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

The idea behind National Beverage Corp and Chemours Co 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.