Correlation Between DOMINION and National Beverage

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

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

Diversification Opportunities for DOMINION and National Beverage

-0.19

Correlation Coefficient

DOMINION  National Beverage

Good diversification

The 3 months correlation between DOMINION and National is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DOMINION ENERGY INC 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 DOMINION 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 DOMINION ENERGY INC 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 DOMINION i.e., DOMINION and National Beverage go up and down completely randomly.

Pair Corralation between DOMINION and National Beverage

Assuming the 90 days trading horizon DOMINION is expected to generate 3.32 times less return on investment than National Beverage. But when comparing it to its historical volatility, DOMINION ENERGY INC is 2.08 times less risky than National Beverage. It trades about 0.04 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,367  in National Beverage Corp on September 2, 2024 and sell it today you would earn a total of  572.00  from holding National Beverage Corp or generate 13.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.76%
Values	Daily Returns

DOMINION ENERGY INC  vs.  National Beverage Corp

DOMINION ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOMINION ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DOMINION is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

National Beverage Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 7 (%) 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.

Pair Trading with DOMINION and National Beverage

The main advantage of trading using opposite DOMINION and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOMINION 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 DOMINION ENERGY INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.