Correlation Between National Beverage and Nexus Gold

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

Diversification Opportunities for National Beverage and Nexus Gold

-0.37

Correlation Coefficient

National Beverage  Nexus Gold

Very good diversification

The 3 months correlation between National and Nexus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Nexus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus Gold Corp 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 Nexus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Gold Corp has no effect on the direction of National Beverage i.e., National Beverage and Nexus Gold go up and down completely randomly.

Pair Corralation between National Beverage and Nexus Gold

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.16 times more return on investment than Nexus Gold. However, National Beverage Corp is 6.24 times less risky than Nexus Gold. It trades about 0.01 of its potential returns per unit of risk. Nexus Gold Corp is currently generating about -0.21 per unit of risk. If you would invest  4,798  in National Beverage Corp on September 14, 2024 and sell it today you would lose (99.00) from holding National Beverage Corp or give up 2.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.14%
Values	Daily Returns

National Beverage Corp  vs.  Nexus Gold Corp

National Beverage Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nexus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexus Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nexus Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Beverage and Nexus Gold

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

The idea behind National Beverage Corp and Nexus Gold Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.