Correlation Between National Beverage and CVECN

Can any of the company-specific risk be diversified away by investing in both National Beverage and CVECN 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 CVECN 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 CVECN 375 15 FEB 52, you can compare the effects of market volatilities on National Beverage and CVECN 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 CVECN. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and CVECN.

Diversification Opportunities for National Beverage and CVECN

0.25

Correlation Coefficient

National Beverage  CVECN

Modest diversification

The 3 months correlation between National and CVECN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and CVECN 375 15 FEB 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVECN 375 15 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 CVECN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVECN 375 15 has no effect on the direction of National Beverage i.e., National Beverage and CVECN go up and down completely randomly.

Pair Corralation between National Beverage and CVECN

Given the investment horizon of 90 days National Beverage Corp is expected to under-perform the CVECN. In addition to that, National Beverage is 1.2 times more volatile than CVECN 375 15 FEB 52. It trades about -0.03 of its total potential returns per unit of risk. CVECN 375 15 FEB 52 is currently generating about -0.01 per unit of volatility. If you would invest  7,263  in CVECN 375 15 FEB 52 on October 10, 2024 and sell it today you would lose (62.00) from holding CVECN 375 15 FEB 52 or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.48%
Values	Daily Returns

National Beverage Corp  vs.  CVECN 375 15 FEB 52

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 fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CVECN 375 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVECN 375 15 FEB 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CVECN 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 CVECN

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

The idea behind National Beverage Corp and CVECN 375 15 FEB 52 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.