Correlation Between Natural Health and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Natural Health and Telefonaktiebolaget 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 Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Natural Health and Telefonaktiebolaget 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 Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Telefonaktiebolaget.
Diversification Opportunities for Natural Health and Telefonaktiebolaget
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and Telefonaktiebolaget is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget 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 Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Natural Health i.e., Natural Health and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Natural Health and Telefonaktiebolaget
Assuming the 90 days trading horizon Natural Health is expected to generate 1.78 times less return on investment than Telefonaktiebolaget. But when comparing it to its historical volatility, Natural Health Trends is 1.19 times less risky than Telefonaktiebolaget. It trades about 0.06 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Telefonaktiebolaget LM Ericsson on September 3, 2024 and sell it today you would earn a total of 556.00 from holding Telefonaktiebolaget LM Ericsson or generate 259.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Natural Health Trends |
| Telefonaktiebolaget |
Natural Health and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Telefonaktiebolaget
The main advantage of trading using opposite Natural Health and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Natural Health vs. CITY OFFICE REIT | Natural Health vs. WillScot Mobile Mini | Natural Health vs. KIMBALL ELECTRONICS | Natural Health vs. ELECTRONIC ARTS |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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