Correlation Between National Beverage and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both National Beverage and Evolution Gaming 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 Evolution Gaming 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 Evolution Gaming Group, you can compare the effects of market volatilities on National Beverage and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Evolution Gaming.
Diversification Opportunities for National Beverage and Evolution Gaming
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Evolution is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of National Beverage i.e., National Beverage and Evolution Gaming go up and down completely randomly.
Pair Corralation between National Beverage and Evolution Gaming
Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the Evolution Gaming. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.62 times less risky than Evolution Gaming. The stock trades about -0.1 of its potential returns per unit of risk. The Evolution Gaming Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,768 in Evolution Gaming Group on December 3, 2024 and sell it today you would lose (125.00) from holding Evolution Gaming Group or give up 1.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
National Beverage Corp vs. Evolution Gaming Group
Performance |
Timeline |
National Beverage Corp |
Evolution Gaming |
National Beverage and Evolution Gaming Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Beverage and Evolution Gaming
The main advantage of trading using opposite National Beverage and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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