Correlation Between National Beverage and ChampionX

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

Diversification Opportunities for National Beverage and ChampionX

0.5

Correlation Coefficient

National Beverage  ChampionX

Very weak diversification

The 3 months correlation between National and ChampionX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of National Beverage i.e., National Beverage and ChampionX go up and down completely randomly.

Pair Corralation between National Beverage and ChampionX

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the ChampionX. In addition to that, National Beverage is 1.16 times more volatile than ChampionX. It trades about -0.35 of its total potential returns per unit of risk. ChampionX is currently generating about -0.24 per unit of volatility. If you would invest  2,973  in ChampionX on October 6, 2024 and sell it today you would lose (238.00) from holding ChampionX or give up 8.01% of portfolio value over 90 days.

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

National Beverage Corp  vs.  ChampionX

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.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with National Beverage and ChampionX

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

The idea behind National Beverage Corp and ChampionX 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.