Correlation Between National Beverage and Titan Machinery

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

Diversification Opportunities for National Beverage and Titan Machinery

-0.58

Correlation Coefficient

National Beverage  Titan Machinery

Excellent diversification

The 3 months correlation between National and Titan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of National Beverage i.e., National Beverage and Titan Machinery go up and down completely randomly.

Pair Corralation between National Beverage and Titan Machinery

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.57 times more return on investment than Titan Machinery. However, National Beverage Corp is 1.75 times less risky than Titan Machinery. It trades about -0.03 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.04 per unit of risk. If you would invest  4,709  in National Beverage Corp on December 2, 2024 and sell it today you would lose (726.00) from holding National Beverage Corp or give up 15.42% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Titan Machinery

National Beverage Corp

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Titan Machinery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Titan Machinery

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

The idea behind National Beverage Corp and Titan Machinery 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.