Correlation Between Edgewell Personal and Natural Health
Can any of the company-specific risk be diversified away by investing in both Edgewell Personal and Natural Health 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 Edgewell Personal and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewell Personal Care and Natural Health Trend, you can compare the effects of market volatilities on Edgewell Personal and Natural Health 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 Edgewell Personal with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and Natural Health.
Diversification Opportunities for Edgewell Personal and Natural Health
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edgewell and Natural is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Natural Health Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trend and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trend has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and Natural Health go up and down completely randomly.
Pair Corralation between Edgewell Personal and Natural Health
Considering the 90-day investment horizon Edgewell Personal Care is expected to under-perform the Natural Health. But the stock apears to be less risky and, when comparing its historical volatility, Edgewell Personal Care is 1.62 times less risky than Natural Health. The stock trades about 0.0 of its potential returns per unit of risk. The Natural Health Trend is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Natural Health Trend on August 30, 2024 and sell it today you would earn a total of 252.00 from holding Natural Health Trend or generate 85.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewell Personal Care vs. Natural Health Trend
Performance |
| Timeline |
| Edgewell Personal Care |
| Natural Health Trend |
Edgewell Personal and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewell Personal and Natural Health
The main advantage of trading using opposite Edgewell Personal and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewell Personal position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| Edgewell Personal vs. Mannatech Incorporated | Edgewell Personal vs. Inter Parfums | Edgewell Personal vs. Nu Skin Enterprises | Edgewell Personal vs. Helen of Troy |
| Natural Health vs. Liquidity Services | Natural Health vs. Hour Loop | Natural Health vs. Qurate Retail Series | Natural Health vs. Emerge Commerce |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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