Correlation Between THRACE PLASTICS and National Beverage

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

By analyzing existing cross correlation between THRACE PLASTICS and National Beverage Corp, you can compare the effects of market volatilities on THRACE PLASTICS and National Beverage 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 THRACE PLASTICS with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and National Beverage.

Diversification Opportunities for THRACE PLASTICS and National Beverage

0.21

Correlation Coefficient

THRACE PLASTICS  National Beverage

Modest diversification

The 3 months correlation between THRACE and National is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and National Beverage go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and National Beverage

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 1.02 times more return on investment than National Beverage. However, THRACE PLASTICS is 1.02 times more volatile than National Beverage Corp. It trades about 0.19 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.18 per unit of risk. If you would invest  394.00  in THRACE PLASTICS on October 22, 2024 and sell it today you would earn a total of  19.00  from holding THRACE PLASTICS or generate 4.82% return on investment over 90 days.

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

THRACE PLASTICS  vs.  National Beverage Corp

THRACE PLASTICS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Despite nearly stable basic indicators, National Beverage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THRACE PLASTICS and National Beverage

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

The idea behind THRACE PLASTICS and National Beverage Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.