Correlation Between Natural Health and InPlay Oil
Can any of the company-specific risk be diversified away by investing in both Natural Health and InPlay Oil 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 Natural Health and InPlay Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and InPlay Oil Corp, you can compare the effects of market volatilities on Natural Health and InPlay Oil 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 Natural Health with a short position of InPlay Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and InPlay Oil.
Diversification Opportunities for Natural Health and InPlay Oil
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Natural and InPlay is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp and Natural Health 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 Natural Health Trends are associated (or correlated) with InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of Natural Health i.e., Natural Health and InPlay Oil go up and down completely randomly.
Pair Corralation between Natural Health and InPlay Oil
Assuming the 90 days trading horizon Natural Health Trends is expected to generate 1.4 times more return on investment than InPlay Oil. However, Natural Health is 1.4 times more volatile than InPlay Oil Corp. It trades about 0.06 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest 246.00 in Natural Health Trends on September 12, 2024 and sell it today you would earn a total of 198.00 from holding Natural Health Trends or generate 80.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. InPlay Oil Corp
Performance |
| Timeline |
| Natural Health Trends |
| InPlay Oil Corp |
Natural Health and InPlay Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and InPlay Oil
The main advantage of trading using opposite Natural Health and InPlay Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, InPlay Oil 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 InPlay Oil will offset losses from the drop in InPlay Oil's long position.| Natural Health vs. Lendlease Group | Natural Health vs. FUYO GENERAL LEASE | Natural Health vs. Ares Management Corp | Natural Health vs. INVITATION HOMES DL |
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 Stocks Directory module to find actively traded stocks across global markets.
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