Correlation Between AETNA and National Beverage

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

By analyzing existing cross correlation between AETNA INC 7625 and National Beverage Corp, you can compare the effects of market volatilities on AETNA 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 AETNA with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of AETNA and National Beverage.

Diversification Opportunities for AETNA and National Beverage

0.09

Correlation Coefficient

AETNA  National Beverage

Significant diversification

The 3 months correlation between AETNA and National is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AETNA INC 7625 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 AETNA 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 AETNA INC 7625 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 AETNA i.e., AETNA and National Beverage go up and down completely randomly.

Pair Corralation between AETNA and National Beverage

Assuming the 90 days trading horizon AETNA INC 7625 is expected to generate 1.01 times more return on investment than National Beverage. However, AETNA is 1.01 times more volatile than National Beverage Corp. It trades about 0.3 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.14 per unit of risk. If you would invest  10,354  in AETNA INC 7625 on October 23, 2024 and sell it today you would earn a total of  340.00  from holding AETNA INC 7625 or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.37%
Values	Daily Returns

AETNA INC 7625  vs.  National Beverage Corp

AETNA INC 7625

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AETNA INC 7625 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, AETNA 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. 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.

Pair Trading with AETNA and National Beverage

The main advantage of trading using opposite AETNA and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AETNA 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 AETNA INC 7625 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.