Correlation Between Great Portland and Natural Health
Can any of the company-specific risk be diversified away by investing in both Great Portland 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 Great Portland and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Portland Estates and Natural Health Trends, you can compare the effects of market volatilities on Great Portland 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 Great Portland with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Portland and Natural Health.
Diversification Opportunities for Great Portland and Natural Health
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Natural is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Great Portland Estates and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends and Great Portland 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 Great Portland Estates 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 Trends has no effect on the direction of Great Portland i.e., Great Portland and Natural Health go up and down completely randomly.
Pair Corralation between Great Portland and Natural Health
Assuming the 90 days trading horizon Great Portland Estates is expected to generate 0.56 times more return on investment than Natural Health. However, Great Portland Estates is 1.78 times less risky than Natural Health. It trades about 0.13 of its potential returns per unit of risk. Natural Health Trends is currently generating about -0.47 per unit of risk. If you would invest 353.00 in Great Portland Estates on September 14, 2024 and sell it today you would earn a total of 13.00 from holding Great Portland Estates or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Portland Estates vs. Natural Health Trends
Performance |
| Timeline |
| Great Portland Estates |
| Natural Health Trends |
Great Portland and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Portland and Natural Health
The main advantage of trading using opposite Great Portland and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Portland 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.| Great Portland vs. Caltagirone SpA | Great Portland vs. ELMOS SEMICONDUCTOR | Great Portland vs. GEAR4MUSIC LS 10 | Great Portland vs. Khiron Life Sciences |
| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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