Correlation Between National Beverage and Gogo

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

Diversification Opportunities for National Beverage and Gogo

0.61

Correlation Coefficient

National Beverage  Gogo

Poor diversification

The 3 months correlation between National and Gogo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Gogo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogo Inc 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 Gogo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogo Inc has no effect on the direction of National Beverage i.e., National Beverage and Gogo go up and down completely randomly.

Pair Corralation between National Beverage and Gogo

Given the investment horizon of 90 days National Beverage is expected to generate 5.51 times less return on investment than Gogo. But when comparing it to its historical volatility, National Beverage Corp is 5.5 times less risky than Gogo. It trades about 0.17 of its potential returns per unit of risk. Gogo Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  655.00  in Gogo Inc on September 4, 2024 and sell it today you would earn a total of  155.00  from holding Gogo Inc or generate 23.66% return on investment over 90 days.

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

National Beverage Corp  vs.  Gogo Inc

National Beverage Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gogo Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gogo Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gogo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National Beverage and Gogo

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

The idea behind National Beverage Corp and Gogo Inc 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..