Correlation Between Natl Beverage and Coca Cola

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Can any of the company-specific risk be diversified away by investing in both Natl Beverage and Coca Cola 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 Natl Beverage and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natl Beverage Cp and Coca-Cola, you can compare the effects of market volatilities on Natl Beverage and Coca Cola 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 Natl Beverage with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natl Beverage and Coca Cola.

Diversification Opportunities for Natl Beverage and Coca Cola

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Natl Beverage and Coca Cola is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Natl Beverage Cp and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola and Natl 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 Natl Beverage Cp are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca-Cola has no effect on the direction of Natl Beverage i.e., Natl Beverage and Coca Cola go up and down completely randomly.

Pair Corralation between Natl Beverage and Coca Cola

Given the investment horizon of 90 days Natl Beverage Cp is expected to under-perform the Coca Cola. In addition to that, Natl Beverage is 1.8 times more volatile than Coca-Cola. It trades about -0.12 of its total potential returns per unit of risk. Coca-Cola is currently generating about -0.1 per unit of volatility. If you would invest  6,287  in Coca-Cola on July 6, 2022 and sell it today you would lose (622.00)  from holding Coca-Cola or give up 9.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Natl Beverage Cp  vs.  Coca-Cola

 Performance (%) 
       Timeline  
Natl Beverage Cp 
Natl Beverage Performance
0 of 100
Over the last 90 days Natl Beverage Cp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Natl Beverage Price Channel

Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Coca Cola Price Channel

Natl Beverage and Coca Cola Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Natl Beverage and Coca Cola

The main advantage of trading using opposite Natl Beverage and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natl Beverage position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.
Natl Beverage vs. Amazon Inc
The idea behind Natl Beverage Cp and Coca-Cola 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.
Coca Cola vs. Amazon Inc
Check out your portfolio center. 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 CEO Directory module to screen CEOs from public companies around the world.

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