Correlation Between Global Partner and National Beverage

Can any of the company-specific risk be diversified away by investing in both Global Partner and National Beverage 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 Global Partner and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Partner Acq and National Beverage Corp, you can compare the effects of market volatilities on Global Partner and National Beverage 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 Global Partner with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Partner and National Beverage.

Diversification Opportunities for Global Partner and National Beverage

-0.25

Correlation Coefficient

Global Partner  National Beverage

Very good diversification

The 3 months correlation between Global and National is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Partner Acq and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Global Partner 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 Global Partner Acq are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Global Partner i.e., Global Partner and National Beverage go up and down completely randomly.

Pair Corralation between Global Partner and National Beverage

Assuming the 90 days horizon Global Partner is expected to generate 8.32 times less return on investment than National Beverage. But when comparing it to its historical volatility, Global Partner Acq is 1.99 times less risky than National Beverage. It trades about 0.0 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,466  in National Beverage Corp on September 19, 2024 and sell it today you would earn a total of  119.00  from holding National Beverage Corp or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.02%
Values	Daily Returns

Global Partner Acq  vs.  National Beverage Corp

Global Partner Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Partner Acq has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Global Partner is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Partner and National Beverage

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

The idea behind Global Partner Acq and National Beverage Corp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.