Correlation Between National Beverage and Natures Miracle

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

Diversification Opportunities for National Beverage and Natures Miracle

0.31

Correlation Coefficient

National Beverage  Natures Miracle

Weak diversification

The 3 months correlation between National and Natures is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding 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 Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of National Beverage i.e., National Beverage and Natures Miracle go up and down completely randomly.

Pair Corralation between National Beverage and Natures Miracle

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.06 times more return on investment than Natures Miracle. However, National Beverage Corp is 16.95 times less risky than Natures Miracle. It trades about -0.17 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about -0.27 per unit of risk. If you would invest  4,383  in National Beverage Corp on October 26, 2024 and sell it today you would lose (177.00) from holding National Beverage Corp or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.21%
Values	Daily Returns

National Beverage Corp  vs.  Natures Miracle Holding

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.

Natures Miracle Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Miracle Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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 recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with National Beverage and Natures Miracle

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

The idea behind National Beverage Corp and Natures Miracle Holding 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.