Correlation Between National Beverage and AUTONATION

Can any of the company-specific risk be diversified away by investing in both National Beverage and AUTONATION 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 AUTONATION 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 AUTONATION INC 38, you can compare the effects of market volatilities on National Beverage and AUTONATION 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 AUTONATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and AUTONATION.

Diversification Opportunities for National Beverage and AUTONATION

0.08

Correlation Coefficient

National Beverage  AUTONATION

Significant diversification

The 3 months correlation between National and AUTONATION is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and AUTONATION INC 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTONATION INC 38 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 AUTONATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTONATION INC 38 has no effect on the direction of National Beverage i.e., National Beverage and AUTONATION go up and down completely randomly.

Pair Corralation between National Beverage and AUTONATION

Given the investment horizon of 90 days National Beverage Corp is expected to generate 2.04 times more return on investment than AUTONATION. However, National Beverage is 2.04 times more volatile than AUTONATION INC 38. It trades about -0.02 of its potential returns per unit of risk. AUTONATION INC 38 is currently generating about -0.19 per unit of risk. If you would invest  4,100  in National Beverage Corp on December 26, 2024 and sell it today you would lose (53.00) from holding National Beverage Corp or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.61%
Values	Daily Returns

National Beverage Corp  vs.  AUTONATION INC 38

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 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.

AUTONATION INC 38

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUTONATION INC 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AUTONATION is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Beverage and AUTONATION

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

The idea behind National Beverage Corp and AUTONATION INC 38 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 Stocks Directory module to find actively traded stocks across global markets.