Correlation Between National Beverage and Ecofin Global

Can any of the company-specific risk be diversified away by investing in both National Beverage and Ecofin Global 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 Ecofin Global 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 Ecofin Global Utilities, you can compare the effects of market volatilities on National Beverage and Ecofin Global 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 Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Ecofin Global.

Diversification Opportunities for National Beverage and Ecofin Global

-0.08

Correlation Coefficient

National Beverage  Ecofin Global

Good diversification

The 3 months correlation between National and Ecofin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of National Beverage i.e., National Beverage and Ecofin Global go up and down completely randomly.

Pair Corralation between National Beverage and Ecofin Global

Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Ecofin Global. In addition to that, National Beverage is 1.35 times more volatile than Ecofin Global Utilities. It trades about -0.07 of its total potential returns per unit of risk. Ecofin Global Utilities is currently generating about -0.09 per unit of volatility. If you would invest  19,498  in Ecofin Global Utilities on September 29, 2024 and sell it today you would lose (1,348) from holding Ecofin Global Utilities or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

National Beverage Corp  vs.  Ecofin Global Utilities

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ecofin Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofin Global Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with National Beverage and Ecofin Global

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

The idea behind National Beverage Corp and Ecofin Global Utilities 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.