Correlation Between Farmmi and Herbalife Nutrition
Can any of the company-specific risk be diversified away by investing in both Farmmi and Herbalife Nutrition 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 Farmmi and Herbalife Nutrition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Herbalife Nutrition, you can compare the effects of market volatilities on Farmmi and Herbalife Nutrition 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 Farmmi with a short position of Herbalife Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Herbalife Nutrition.
Diversification Opportunities for Farmmi and Herbalife Nutrition
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farmmi and Herbalife is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Herbalife Nutrition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herbalife Nutrition and Farmmi 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 Farmmi Inc are associated (or correlated) with Herbalife Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herbalife Nutrition has no effect on the direction of Farmmi i.e., Farmmi and Herbalife Nutrition go up and down completely randomly.
Pair Corralation between Farmmi and Herbalife Nutrition
Given the investment horizon of 90 days Farmmi Inc is expected to generate 2.27 times more return on investment than Herbalife Nutrition. However, Farmmi is 2.27 times more volatile than Herbalife Nutrition. It trades about 0.12 of its potential returns per unit of risk. Herbalife Nutrition is currently generating about -0.01 per unit of risk. If you would invest 20.00 in Farmmi Inc on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Farmmi Inc or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmmi Inc vs. Herbalife Nutrition
Performance |
| Timeline |
| Farmmi Inc |
| Herbalife Nutrition |
Farmmi and Herbalife Nutrition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Herbalife Nutrition
The main advantage of trading using opposite Farmmi and Herbalife Nutrition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Herbalife Nutrition 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 Herbalife Nutrition will offset losses from the drop in Herbalife Nutrition's long position.The idea behind Farmmi Inc and Herbalife Nutrition 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.| Herbalife Nutrition vs. Colgate Palmolive | Herbalife Nutrition vs. Estee Lauder Companies | Herbalife Nutrition vs. Procter Gamble | Herbalife Nutrition vs. United Guardian |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |