Correlation Between CAP LEASE and National Beverage

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

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

Diversification Opportunities for CAP LEASE and National Beverage

-0.68

Correlation Coefficient

CAP LEASE  National Beverage

Excellent diversification

The 3 months correlation between CAP and National is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION 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 CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and National Beverage go up and down completely randomly.

Pair Corralation between CAP LEASE and National Beverage

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the National Beverage. In addition to that, CAP LEASE is 1.18 times more volatile than National Beverage Corp. It trades about -0.03 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest  4,573  in National Beverage Corp on September 15, 2024 and sell it today you would earn a total of  138.00  from holding National Beverage Corp or generate 3.02% return on investment over 90 days.

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

CAP LEASE AVIATION  vs.  National Beverage Corp

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with CAP LEASE and National Beverage

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

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.