Correlation Between AMCON Distributing and National Beverage

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

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

Diversification Opportunities for AMCON Distributing and National Beverage

-0.34

Correlation Coefficient

AMCON Distributing  National Beverage

Very good diversification

The 3 months correlation between AMCON and National is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing i.e., AMCON Distributing and National Beverage go up and down completely randomly.

Pair Corralation between AMCON Distributing and National Beverage

Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.19 times less return on investment than National Beverage. In addition to that, AMCON Distributing is 2.44 times more volatile than National Beverage Corp. It trades about 0.01 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,449  in National Beverage Corp on September 13, 2024 and sell it today you would earn a total of  232.00  from holding National Beverage Corp or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

AMCON Distributing  vs.  National Beverage Corp

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

National Beverage Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and National Beverage

The main advantage of trading using opposite AMCON Distributing and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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 AMCON Distributing 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.