Correlation Between Natural Health and United Parcel
Can any of the company-specific risk be diversified away by investing in both Natural Health and United Parcel 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 United Parcel 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 United Parcel Service, you can compare the effects of market volatilities on Natural Health and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and United Parcel.
Diversification Opportunities for Natural Health and United Parcel
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and United is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Natural Health i.e., Natural Health and United Parcel go up and down completely randomly.
Pair Corralation between Natural Health and United Parcel
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the United Parcel. In addition to that, Natural Health is 1.78 times more volatile than United Parcel Service. It trades about -0.12 of its total potential returns per unit of risk. United Parcel Service is currently generating about 0.04 per unit of volatility. If you would invest 12,181 in United Parcel Service on September 13, 2024 and sell it today you would earn a total of 247.00 from holding United Parcel Service or generate 2.03% 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. United Parcel Service
Performance |
| Timeline |
| Natural Health Trends |
| United Parcel Service |
Natural Health and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and United Parcel
The main advantage of trading using opposite Natural Health and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
| United Parcel vs. Corporate Office Properties | United Parcel vs. Gol Intelligent Airlines | United Parcel vs. CENTURIA OFFICE REIT | United Parcel vs. JAPAN AIRLINES |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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