Correlation Between Dave Busters and Natural Alternatives

Can any of the company-specific risk be diversified away by investing in both Dave Busters and Natural Alternatives 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 Dave Busters and Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dave Busters Entertainment and Natural Alternatives International, you can compare the effects of market volatilities on Dave Busters and Natural Alternatives 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 Dave Busters with a short position of Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Natural Alternatives.

Diversification Opportunities for Dave Busters and Natural Alternatives

0.6

Correlation Coefficient

Dave Busters  Natural Alternatives

Poor diversification

The 3 months correlation between Dave and Natural is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives and Dave Busters 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 Dave Busters Entertainment are associated (or correlated) with Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Dave Busters i.e., Dave Busters and Natural Alternatives go up and down completely randomly.

Pair Corralation between Dave Busters and Natural Alternatives

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Natural Alternatives. In addition to that, Dave Busters is 1.39 times more volatile than Natural Alternatives International. It trades about -0.12 of its total potential returns per unit of risk. Natural Alternatives International is currently generating about -0.11 per unit of volatility. If you would invest  431.00  in Natural Alternatives International on December 28, 2024 and sell it today you would lose (86.00) from holding Natural Alternatives International or give up 19.95% of portfolio value over 90 days.

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

Dave Busters Entertainment  vs.  Natural Alternatives Internati

Dave Busters Enterta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.

Natural Alternatives

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Dave Busters and Natural Alternatives

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

The idea behind Dave Busters Entertainment and Natural Alternatives International 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.