Correlation Between Natural Alternatives and Gentex
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives and Gentex 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 Alternatives and Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and Gentex, you can compare the effects of market volatilities on Natural Alternatives and Gentex 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 Alternatives with a short position of Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and Gentex.
Diversification Opportunities for Natural Alternatives and Gentex
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Gentex is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and Natural Alternatives 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 Alternatives International are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Natural Alternatives i.e., Natural Alternatives and Gentex go up and down completely randomly.
Pair Corralation between Natural Alternatives and Gentex
Given the investment horizon of 90 days Natural Alternatives International is expected to generate 0.57 times more return on investment than Gentex. However, Natural Alternatives International is 1.77 times less risky than Gentex. It trades about -0.24 of its potential returns per unit of risk. Gentex is currently generating about -0.33 per unit of risk. If you would invest 425.00 in Natural Alternatives International on November 27, 2024 and sell it today you would lose (25.00) from holding Natural Alternatives International or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Alternatives Internati vs. Gentex
Performance |
| Timeline |
| Natural Alternatives |
| Gentex |
Natural Alternatives and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Alternatives and Gentex
The main advantage of trading using opposite Natural Alternatives and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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