Correlation Between Naturhouse Health and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Naturhouse Health and Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC, you can compare the effects of market volatilities on Naturhouse Health and Lendinvest PLC 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 Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and Lendinvest PLC.
Diversification Opportunities for Naturhouse Health and Lendinvest PLC
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Naturhouse and Lendinvest is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest 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 Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Naturhouse Health i.e., Naturhouse Health and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Naturhouse Health and Lendinvest PLC
Assuming the 90 days trading horizon Naturhouse Health SA is expected to generate 2.05 times more return on investment than Lendinvest PLC. However, Naturhouse Health is 2.05 times more volatile than Lendinvest PLC. It trades about 0.14 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.17 per unit of risk. If you would invest 167.00 in Naturhouse Health SA on January 26, 2025 and sell it today you would earn a total of 7.00 from holding Naturhouse Health SA or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naturhouse Health SA vs. Lendinvest PLC
Performance |
| Timeline |
| Naturhouse Health |
| Lendinvest PLC |
Naturhouse Health and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturhouse Health and Lendinvest PLC
The main advantage of trading using opposite Naturhouse Health and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse Health position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| Naturhouse Health vs. EVS Broadcast Equipment | Naturhouse Health vs. Lindsell Train Investment | Naturhouse Health vs. Hansa Investment | Naturhouse Health vs. EJF Investments |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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