Correlation Between National Beverage and Monks Investment

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

Diversification Opportunities for National Beverage and Monks Investment

0.84

Correlation Coefficient

National Beverage  Monks Investment

Very poor diversification

The 3 months correlation between National and Monks is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of National Beverage i.e., National Beverage and Monks Investment go up and down completely randomly.

Pair Corralation between National Beverage and Monks Investment

Assuming the 90 days trading horizon National Beverage is expected to generate 1.76 times less return on investment than Monks Investment. In addition to that, National Beverage is 1.93 times more volatile than Monks Investment Trust. It trades about 0.07 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.25 per unit of volatility. If you would invest  113,600  in Monks Investment Trust on September 14, 2024 and sell it today you would earn a total of  15,800  from holding Monks Investment Trust or generate 13.91% return on investment over 90 days.

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

National Beverage Corp  vs.  Monks Investment Trust

National Beverage Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Monks Investment Trust

Risk-Adjusted Performance

19 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Beverage and Monks Investment

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

The idea behind National Beverage Corp and Monks Investment Trust 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.