Correlation Between National Beverage and Globalink Investment

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

Diversification Opportunities for National Beverage and Globalink Investment

0.24

Correlation Coefficient

National Beverage  Globalink Investment

Modest diversification

The 3 months correlation between National and Globalink is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Globalink Investment Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment Unit 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 Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment Unit has no effect on the direction of National Beverage i.e., National Beverage and Globalink Investment go up and down completely randomly.

Pair Corralation between National Beverage and Globalink Investment

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.8 times more return on investment than Globalink Investment. However, National Beverage Corp is 1.24 times less risky than Globalink Investment. It trades about -0.06 of its potential returns per unit of risk. Globalink Investment Unit is currently generating about -0.1 per unit of risk. If you would invest  4,564  in National Beverage Corp on October 22, 2024 and sell it today you would lose (314.00) from holding National Beverage Corp or give up 6.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.69%
Values	Daily Returns

National Beverage Corp  vs.  Globalink Investment Unit

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Globalink Investment Unit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globalink Investment Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with National Beverage and Globalink Investment

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

The idea behind National Beverage Corp and Globalink Investment Unit 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.