Correlation Between National Beverage and Capital Clean

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

Diversification Opportunities for National Beverage and Capital Clean

-0.42

Correlation Coefficient

National Beverage  Capital Clean

Very good diversification

The 3 months correlation between National and Capital is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy 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 Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of National Beverage i.e., National Beverage and Capital Clean go up and down completely randomly.

Pair Corralation between National Beverage and Capital Clean

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Capital Clean. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.01 times less risky than Capital Clean. The stock trades about -0.01 of its potential returns per unit of risk. The Capital Clean Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,819  in Capital Clean Energy on December 29, 2024 and sell it today you would earn a total of  160.00  from holding Capital Clean Energy or generate 8.8% 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.  Capital Clean Energy

National Beverage Corp

Risk-Adjusted Performance

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.

Capital Clean Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Capital Clean may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with National Beverage and Capital Clean

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

The idea behind National Beverage Corp and Capital Clean Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.