Correlation Between National Beverage and ORMAT TECHNOLOGIES

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

Diversification Opportunities for National Beverage and ORMAT TECHNOLOGIES

0.78

Correlation Coefficient

National Beverage  ORMAT TECHNOLOGIES

Poor diversification

The 3 months correlation between National and ORMAT is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of National Beverage i.e., National Beverage and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between National Beverage and ORMAT TECHNOLOGIES

Assuming the 90 days horizon National Beverage Corp is expected to generate 1.06 times more return on investment than ORMAT TECHNOLOGIES. However, National Beverage is 1.06 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.09 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.03 per unit of risk. If you would invest  4,080  in National Beverage Corp on September 18, 2024 and sell it today you would earn a total of  380.00  from holding National Beverage Corp or generate 9.31% return on investment over 90 days.

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

National Beverage Corp  vs.  ORMAT TECHNOLOGIES

National Beverage Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with National Beverage and ORMAT TECHNOLOGIES

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

The idea behind National Beverage Corp and ORMAT TECHNOLOGIES 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 Valuation module to check real value of public entities based on technical and fundamental data.