Correlation Between Herbalife Nutrition and Freshpet
Can any of the company-specific risk be diversified away by investing in both Herbalife Nutrition and Freshpet 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 Freshpet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herbalife Nutrition and Freshpet, you can compare the effects of market volatilities on Herbalife Nutrition and Freshpet 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 Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herbalife Nutrition and Freshpet.
Diversification Opportunities for Herbalife Nutrition and Freshpet
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herbalife and Freshpet is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet 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 Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Herbalife Nutrition i.e., Herbalife Nutrition and Freshpet go up and down completely randomly.
Pair Corralation between Herbalife Nutrition and Freshpet
Considering the 90-day investment horizon Herbalife Nutrition is expected to under-perform the Freshpet. In addition to that, Herbalife Nutrition is 1.69 times more volatile than Freshpet. It trades about -0.06 of its total potential returns per unit of risk. Freshpet is currently generating about 0.07 per unit of volatility. If you would invest 13,045 in Freshpet on September 2, 2024 and sell it today you would earn a total of 2,260 from holding Freshpet or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herbalife Nutrition vs. Freshpet
Performance |
| Timeline |
| Herbalife Nutrition |
| Freshpet |
Herbalife Nutrition and Freshpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herbalife Nutrition and Freshpet
The main advantage of trading using opposite Herbalife Nutrition and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herbalife Nutrition position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet'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 |
| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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