Correlation Between Herbalife Nutrition and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Herbalife Nutrition and Farmer Bros 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 Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herbalife Nutrition and Farmer Bros Co, you can compare the effects of market volatilities on Herbalife Nutrition and Farmer Bros 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 Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herbalife Nutrition and Farmer Bros.
Diversification Opportunities for Herbalife Nutrition and Farmer Bros
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Herbalife and Farmer is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros 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 Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Herbalife Nutrition i.e., Herbalife Nutrition and Farmer Bros go up and down completely randomly.
Pair Corralation between Herbalife Nutrition and Farmer Bros
Considering the 90-day investment horizon Herbalife Nutrition is expected to under-perform the Farmer Bros. But the stock apears to be less risky and, when comparing its historical volatility, Herbalife Nutrition is 1.04 times less risky than Farmer Bros. The stock trades about -0.06 of its potential returns per unit of risk. The Farmer Bros Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Farmer Bros Co on September 2, 2024 and sell it today you would lose (83.00) from holding Farmer Bros Co or give up 28.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herbalife Nutrition vs. Farmer Bros Co
Performance |
| Timeline |
| Herbalife Nutrition |
| Farmer Bros |
Herbalife Nutrition and Farmer Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herbalife Nutrition and Farmer Bros
The main advantage of trading using opposite Herbalife Nutrition and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herbalife Nutrition position performs unexpectedly, Farmer Bros 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 Farmer Bros will offset losses from the drop in Farmer Bros' long position.| Herbalife Nutrition vs. Nomad Foods | Herbalife Nutrition vs. Bellring Brands LLC | Herbalife Nutrition vs. Pilgrims Pride Corp | Herbalife Nutrition vs. Ingredion Incorporated |
| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. J J Snack |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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