Correlation Between National Beverage and Heritage Distilling

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

Diversification Opportunities for National Beverage and Heritage Distilling

0.34

Correlation Coefficient

National Beverage  Heritage Distilling

Weak diversification

The 3 months correlation between National and Heritage is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Heritage Distilling Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Distilling 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 Heritage Distilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Distilling has no effect on the direction of National Beverage i.e., National Beverage and Heritage Distilling go up and down completely randomly.

Pair Corralation between National Beverage and Heritage Distilling

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.32 times more return on investment than Heritage Distilling. However, National Beverage Corp is 3.16 times less risky than Heritage Distilling. It trades about 0.05 of its potential returns per unit of risk. Heritage Distilling Holding is currently generating about -0.33 per unit of risk. If you would invest  4,451  in National Beverage Corp on September 15, 2024 and sell it today you would earn a total of  218.00  from holding National Beverage Corp or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

National Beverage Corp  vs.  Heritage Distilling Holding

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.

Heritage Distilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heritage Distilling Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with National Beverage and Heritage Distilling

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

The idea behind National Beverage Corp and Heritage Distilling Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..