Correlation Between Naturhouse Health and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Naturhouse Health and DFS Furniture 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 Naturhouse Health and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturhouse Health SA and DFS Furniture PLC, you can compare the effects of market volatilities on Naturhouse Health and DFS Furniture 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 Naturhouse Health with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and DFS Furniture.
Diversification Opportunities for Naturhouse Health and DFS Furniture
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naturhouse and DFS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Naturhouse Health 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 Naturhouse Health SA are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Naturhouse Health i.e., Naturhouse Health and DFS Furniture go up and down completely randomly.
Pair Corralation between Naturhouse Health and DFS Furniture
Assuming the 90 days trading horizon Naturhouse Health is expected to generate 3.59 times less return on investment than DFS Furniture. But when comparing it to its historical volatility, Naturhouse Health SA is 1.04 times less risky than DFS Furniture. It trades about 0.02 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,400 in DFS Furniture PLC on September 1, 2024 and sell it today you would earn a total of 2,500 from holding DFS Furniture PLC or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Naturhouse Health SA vs. DFS Furniture PLC
Performance |
| Timeline |
| Naturhouse Health |
| DFS Furniture PLC |
Naturhouse Health and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturhouse Health and DFS Furniture
The main advantage of trading using opposite Naturhouse Health and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse Health position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Naturhouse Health vs. Uniper SE | Naturhouse Health vs. Mulberry Group PLC | Naturhouse Health vs. London Security Plc | Naturhouse Health vs. Triad Group PLC |
| DFS Furniture vs. Centaur Media | DFS Furniture vs. MTI Wireless Edge | DFS Furniture vs. Roadside Real Estate | DFS Furniture vs. Norman Broadbent Plc |
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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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