Correlation Between National Beverage and Afterpay

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

Diversification Opportunities for National Beverage and Afterpay

0.0

Correlation Coefficient

National Beverage  Afterpay

Pay attention - limited upside

The 3 months correlation between National and Afterpay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Afterpay Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afterpay Limited 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 Afterpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afterpay Limited has no effect on the direction of National Beverage i.e., National Beverage and Afterpay go up and down completely randomly.

Pair Corralation between National Beverage and Afterpay

If you would invest (100.00) in Afterpay Limited on September 28, 2024 and sell it today you would earn a total of  100.00  from holding Afterpay Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

National Beverage Corp  vs.  Afterpay Limited

National Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, National Beverage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Afterpay Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afterpay Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Afterpay is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Beverage and Afterpay

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

The idea behind National Beverage Corp and Afterpay Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.