Correlation Between National Beverage and Sligro Food

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

Diversification Opportunities for National Beverage and Sligro Food

-0.37

Correlation Coefficient

National Beverage  Sligro Food

Very good diversification

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

Pair Corralation between National Beverage and Sligro Food

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.77 times more return on investment than Sligro Food. However, National Beverage Corp is 1.29 times less risky than Sligro Food. It trades about 0.14 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.07 per unit of risk. If you would invest  4,485  in National Beverage Corp on September 5, 2024 and sell it today you would earn a total of  489.00  from holding National Beverage Corp or generate 10.9% return on investment over 90 days.

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

National Beverage Corp  vs.  Sligro Food Group

National Beverage Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with National Beverage and Sligro Food

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

The idea behind National Beverage Corp and Sligro Food Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.