Correlation Between Zapata Computing and National Beverage

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

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

Diversification Opportunities for Zapata Computing and National Beverage

-0.57

Correlation Coefficient

Zapata Computing  National Beverage

Excellent diversification

The 3 months correlation between Zapata and National is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zapata Computing Holdings 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 Zapata Computing 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 Zapata Computing Holdings 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 Zapata Computing i.e., Zapata Computing and National Beverage go up and down completely randomly.

Pair Corralation between Zapata Computing and National Beverage

Assuming the 90 days horizon Zapata Computing Holdings is expected to generate 67.78 times more return on investment than National Beverage. However, Zapata Computing is 67.78 times more volatile than National Beverage Corp. It trades about 0.13 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.0 per unit of risk. If you would invest  3.47  in Zapata Computing Holdings on September 19, 2024 and sell it today you would lose (2.91) from holding Zapata Computing Holdings or give up 83.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	49.21%
Values	Daily Returns

Zapata Computing Holdings  vs.  National Beverage Corp

Zapata Computing Holdings

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Zapata Computing Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Zapata Computing showed solid returns over the last few months and may actually be approaching a breakup point.

National Beverage Corp

Risk-Adjusted Performance

0 of 100

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 Zapata Computing and National Beverage

The main advantage of trading using opposite Zapata Computing and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zapata Computing 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 Zapata Computing Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..