Correlation Between National Beverage and Acme United

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

Diversification Opportunities for National Beverage and Acme United

0.35

Correlation Coefficient

National Beverage  Acme United

Weak diversification

The 3 months correlation between National and Acme is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United 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 Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of National Beverage i.e., National Beverage and Acme United go up and down completely randomly.

Pair Corralation between National Beverage and Acme United

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.79 times more return on investment than Acme United. However, National Beverage Corp is 1.27 times less risky than Acme United. It trades about 0.03 of its potential returns per unit of risk. Acme United is currently generating about 0.01 per unit of risk. If you would invest  4,565  in National Beverage Corp on September 17, 2024 and sell it today you would earn a total of  104.00  from holding National Beverage Corp or generate 2.28% return on investment over 90 days.

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

National Beverage Corp  vs.  Acme United

National Beverage Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 2 (%) 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.

Acme United

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acme United are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Acme United is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Beverage and Acme United

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

The idea behind National Beverage Corp and Acme United 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..