Correlation Between National Beverage and Safety Shot

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

Diversification Opportunities for National Beverage and Safety Shot

-0.55

Correlation Coefficient

National Beverage  Safety Shot

Excellent diversification

The 3 months correlation between National and Safety is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of National Beverage i.e., National Beverage and Safety Shot go up and down completely randomly.

Pair Corralation between National Beverage and Safety Shot

Given the investment horizon of 90 days National Beverage Corp is expected to generate 0.34 times more return on investment than Safety Shot. However, National Beverage Corp is 2.94 times less risky than Safety Shot. It trades about 0.0 of its potential returns per unit of risk. Safety Shot is currently generating about -0.18 per unit of risk. If you would invest  4,632  in National Beverage Corp on September 20, 2024 and sell it today you would lose (37.00) from holding National Beverage Corp or give up 0.8% of portfolio value over 90 days.

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

National Beverage Corp  vs.  Safety Shot

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.

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Beverage and Safety Shot

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

The idea behind National Beverage Corp and Safety Shot 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.