Correlation Between United Internet and National Beverage

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

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

Diversification Opportunities for United Internet and National Beverage

-0.75

Correlation Coefficient

United Internet  National Beverage

Pay attention - limited upside

The 3 months correlation between United and National is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG 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 United Internet 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 United Internet AG 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 United Internet i.e., United Internet and National Beverage go up and down completely randomly.

Pair Corralation between United Internet and National Beverage

Assuming the 90 days trading horizon United Internet AG is expected to generate 1.56 times more return on investment than National Beverage. However, United Internet is 1.56 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 -0.07 per unit of risk. If you would invest  1,560  in United Internet AG on December 30, 2024 and sell it today you would earn a total of  488.00  from holding United Internet AG or generate 31.28% return on investment over 90 days.

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

United Internet AG  vs.  National Beverage Corp

United Internet AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Internet AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, United Internet reported solid returns over the last few months and may actually be approaching a breakup point.

National Beverage Corp

Risk-Adjusted Performance

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United Internet and National Beverage

The main advantage of trading using opposite United Internet and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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 United Internet AG 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.