Correlation Between National Beverage and SoftBank Group

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

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

Diversification Opportunities for National Beverage and SoftBank Group

0.55

Correlation Coefficient

National Beverage  SoftBank Group

Very weak diversification

The 3 months correlation between National and SoftBank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and National Beverage 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 Beverage Corp are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of National Beverage i.e., National Beverage and SoftBank Group go up and down completely randomly.

Pair Corralation between National Beverage and SoftBank Group

Assuming the 90 days trading horizon National Beverage is expected to generate 9.67 times less return on investment than SoftBank Group. But when comparing it to its historical volatility, National Beverage Corp is 1.68 times less risky than SoftBank Group. It trades about 0.03 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  817,572  in SoftBank Group Corp on September 18, 2024 and sell it today you would earn a total of  166,128  from holding SoftBank Group Corp or generate 20.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.19%
Values	Daily Returns

National Beverage Corp  vs.  SoftBank Group Corp

National Beverage Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Beverage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SoftBank Group Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SoftBank Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and SoftBank Group

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

The idea behind National Beverage Corp and SoftBank Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.