Correlation Between Herbalife Nutrition and ELF Beauty
Can any of the company-specific risk be diversified away by investing in both Herbalife Nutrition and ELF Beauty 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 Herbalife Nutrition and ELF Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herbalife Nutrition and ELF Beauty, you can compare the effects of market volatilities on Herbalife Nutrition and ELF Beauty 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 Herbalife Nutrition with a short position of ELF Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herbalife Nutrition and ELF Beauty.
Diversification Opportunities for Herbalife Nutrition and ELF Beauty
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Herbalife and ELF is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition and ELF Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELF Beauty and Herbalife Nutrition 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 Herbalife Nutrition are associated (or correlated) with ELF Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELF Beauty has no effect on the direction of Herbalife Nutrition i.e., Herbalife Nutrition and ELF Beauty go up and down completely randomly.
Pair Corralation between Herbalife Nutrition and ELF Beauty
Considering the 90-day investment horizon Herbalife Nutrition is expected to generate 0.67 times more return on investment than ELF Beauty. However, Herbalife Nutrition is 1.5 times less risky than ELF Beauty. It trades about -0.16 of its potential returns per unit of risk. ELF Beauty is currently generating about -0.16 per unit of risk. If you would invest 856.00 in Herbalife Nutrition on January 11, 2025 and sell it today you would lose (122.00) from holding Herbalife Nutrition or give up 14.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herbalife Nutrition vs. ELF Beauty
Performance |
| Timeline |
| Herbalife Nutrition |
| ELF Beauty |
Herbalife Nutrition and ELF Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herbalife Nutrition and ELF Beauty
The main advantage of trading using opposite Herbalife Nutrition and ELF Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herbalife Nutrition position performs unexpectedly, ELF Beauty 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 ELF Beauty will offset losses from the drop in ELF Beauty's long position.| Herbalife Nutrition vs. Nomad Foods | Herbalife Nutrition vs. Bellring Brands LLC | Herbalife Nutrition vs. Pilgrims Pride Corp | Herbalife Nutrition vs. Ingredion Incorporated |
| ELF Beauty vs. Procter Gamble | ELF Beauty vs. Colgate Palmolive | ELF Beauty vs. Coty Inc | ELF Beauty vs. Kenvue 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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