Correlation Between Associated British and Natures Sunshine
Can any of the company-specific risk be diversified away by investing in both Associated British and Natures Sunshine 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 Associated British and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Natures Sunshine Products, you can compare the effects of market volatilities on Associated British and Natures Sunshine 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 Associated British with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Natures Sunshine.
Diversification Opportunities for Associated British and Natures Sunshine
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Natures is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products and Associated British 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 Associated British Foods are associated (or correlated) with Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of Associated British i.e., Associated British and Natures Sunshine go up and down completely randomly.
Pair Corralation between Associated British and Natures Sunshine
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Natures Sunshine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Associated British Foods is 3.66 times less risky than Natures Sunshine. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Natures Sunshine Products is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Natures Sunshine Products on August 27, 2024 and sell it today you would earn a total of 275.00 from holding Natures Sunshine Products or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Natures Sunshine Products
Performance |
| Timeline |
| Associated British Foods |
| Natures Sunshine Products |
Associated British and Natures Sunshine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Natures Sunshine
The main advantage of trading using opposite Associated British and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Natures Sunshine 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 Natures Sunshine will offset losses from the drop in Natures Sunshine's long position.| Associated British vs. Darling Ingredients | Associated British vs. JM Smucker | Associated British vs. McCormick Company Incorporated | Associated British vs. Campbell Soup |
| Natures Sunshine vs. Seneca Foods Corp | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Associated British Foods |
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 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..
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