Correlation Between Natural Health and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Natural Health and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Natural Health and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and Quaker Chemical.
Diversification Opportunities for Natural Health and Quaker Chemical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Natural and Quaker is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Natural Health i.e., Natural Health and Quaker Chemical go up and down completely randomly.
Pair Corralation between Natural Health and Quaker Chemical
Assuming the 90 days trading horizon Natural Health Trends is expected to generate 1.34 times more return on investment than Quaker Chemical. However, Natural Health is 1.34 times more volatile than Quaker Chemical. It trades about 0.06 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.0 per unit of risk. If you would invest 264.00 in Natural Health Trends on September 3, 2024 and sell it today you would earn a total of 246.00 from holding Natural Health Trends or generate 93.18% 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. Quaker Chemical
Performance |
| Timeline |
| Natural Health Trends |
| Quaker Chemical |
Natural Health and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and Quaker Chemical
The main advantage of trading using opposite Natural Health and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical'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 |
| Quaker Chemical vs. COMMERCIAL VEHICLE | Quaker Chemical vs. MOLSON RS BEVERAGE | Quaker Chemical vs. SENECA FOODS A | Quaker Chemical vs. TYSON FOODS A |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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