Correlation Between Fevertree Drinks and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and Naturhouse 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 Fevertree Drinks and Naturhouse Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Naturhouse Health SA, you can compare the effects of market volatilities on Fevertree Drinks and Naturhouse 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 Fevertree Drinks with a short position of Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Naturhouse Health.
Diversification Opportunities for Fevertree Drinks and Naturhouse Health
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fevertree and Naturhouse is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Naturhouse Health go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Naturhouse Health
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Naturhouse Health. In addition to that, Fevertree Drinks is 1.02 times more volatile than Naturhouse Health SA. It trades about -0.06 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.04 per unit of volatility. If you would invest 149.00 in Naturhouse Health SA on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Naturhouse Health SA or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.4% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Naturhouse Health SA
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Naturhouse Health |
Fevertree Drinks and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Naturhouse Health
The main advantage of trading using opposite Fevertree Drinks and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, Naturhouse 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Fevertree Drinks vs. Home Depot | Fevertree Drinks vs. Weiss Korea Opportunity | Fevertree Drinks vs. River and Mercantile | Fevertree Drinks vs. Chrysalis Investments |
| Naturhouse Health vs. Uniper SE | Naturhouse Health vs. Mulberry Group PLC | Naturhouse Health vs. London Security Plc | Naturhouse Health vs. Triad Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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