Correlation Between Natural Health and G III
Can any of the company-specific risk be diversified away by investing in both Natural Health and G III 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 G III 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 G III APPAREL GROUP, you can compare the effects of market volatilities on Natural Health and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and G III.
Diversification Opportunities for Natural Health and G III
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and GI4 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and G III APPAREL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III APPAREL 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III APPAREL has no effect on the direction of Natural Health i.e., Natural Health and G III go up and down completely randomly.
Pair Corralation between Natural Health and G III
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the G III. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trends is 1.1 times less risky than G III. The stock trades about -0.47 of its potential returns per unit of risk. The G III APPAREL GROUP is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,860 in G III APPAREL GROUP on September 18, 2024 and sell it today you would earn a total of 440.00 from holding G III APPAREL GROUP or generate 15.38% 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. G III APPAREL GROUP
Performance |
| Timeline |
| Natural Health Trends |
| G III APPAREL |
Natural Health and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and G III
The main advantage of trading using opposite Natural Health and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, G III 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 G III will offset losses from the drop in G III's long position.| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
| G III vs. ScanSource | G III vs. The Boston Beer | G III vs. Siamgas And Petrochemicals | G III vs. Natural Health Trends |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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