Correlation Between National Presto and Blue Line

Can any of the company-specific risk be diversified away by investing in both National Presto and Blue Line 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 Presto and Blue Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Presto Industries and Blue Line Protection, you can compare the effects of market volatilities on National Presto and Blue Line 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 Presto with a short position of Blue Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Presto and Blue Line.

Diversification Opportunities for National Presto and Blue Line

-0.75

Correlation Coefficient

National Presto  Blue Line

Pay attention - limited upside

The 3 months correlation between National and Blue is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection and National Presto 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 Presto Industries are associated (or correlated) with Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of National Presto i.e., National Presto and Blue Line go up and down completely randomly.

Pair Corralation between National Presto and Blue Line

Considering the 90-day investment horizon National Presto is expected to generate 1.61 times less return on investment than Blue Line. But when comparing it to its historical volatility, National Presto Industries is 10.6 times less risky than Blue Line. It trades about 0.2 of its potential returns per unit of risk. Blue Line Protection is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.69  in Blue Line Protection on October 22, 2024 and sell it today you would lose (0.30) from holding Blue Line Protection or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

National Presto Industries  vs.  Blue Line Protection

National Presto Indu

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Presto Industries are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, National Presto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Blue Line is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Presto and Blue Line

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

The idea behind National Presto Industries and Blue Line Protection 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.