Correlation Between Ammo and National Presto

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

By analyzing existing cross correlation between Ammo Inc and National Presto Industries, you can compare the effects of market volatilities on Ammo and National Presto 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 Ammo with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo and National Presto.

Diversification Opportunities for Ammo and National Presto

0.0

Correlation Coefficient

Ammo  National Presto

Pay attention - limited upside

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

Pair Corralation between Ammo and National Presto

Given the investment horizon of 90 days Ammo is expected to generate 10.41 times less return on investment than National Presto. In addition to that, Ammo is 2.31 times more volatile than National Presto Industries. It trades about 0.01 of its total potential returns per unit of risk. National Presto Industries is currently generating about 0.33 per unit of volatility. If you would invest  7,203  in National Presto Industries on September 5, 2024 and sell it today you would earn a total of  1,111  from holding National Presto Industries or generate 15.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ammo Inc  vs.  National Presto Industries

Ammo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ammo Inc 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

National Presto Indu

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Ammo and National Presto

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

The idea behind Ammo Inc and National Presto Industries 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.