Correlation Between Natural Health and United Internet
Can any of the company-specific risk be diversified away by investing in both Natural Health and United Internet 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 Internet 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 Internet AG, you can compare the effects of market volatilities on Natural Health and United Internet 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 Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and United Internet.
Diversification Opportunities for Natural Health and United Internet
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Natural and United is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Natural Health i.e., Natural Health and United Internet go up and down completely randomly.
Pair Corralation between Natural Health and United Internet
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the United Internet. In addition to that, Natural Health is 2.29 times more volatile than United Internet AG. It trades about -0.47 of its total potential returns per unit of risk. United Internet AG is currently generating about 0.0 per unit of volatility. If you would invest 1,584 in United Internet AG on September 19, 2024 and sell it today you would lose (3.00) from holding United Internet AG or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. United Internet AG
Performance |
| Timeline |
| Natural Health Trends |
| United Internet AG |
Natural Health and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and United Internet
The main advantage of trading using opposite Natural Health and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, United Internet 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 Internet will offset losses from the drop in United Internet's long position.| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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