Correlation Between Natures Sunshine and Central Garden
Can any of the company-specific risk be diversified away by investing in both Natures Sunshine and Central Garden 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 Natures Sunshine and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natures Sunshine Products and Central Garden Pet, you can compare the effects of market volatilities on Natures Sunshine and Central Garden 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 Natures Sunshine with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Sunshine and Central Garden.
Diversification Opportunities for Natures Sunshine and Central Garden
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natures and Central is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and Natures Sunshine 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 Natures Sunshine Products are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Natures Sunshine i.e., Natures Sunshine and Central Garden go up and down completely randomly.
Pair Corralation between Natures Sunshine and Central Garden
Given the investment horizon of 90 days Natures Sunshine Products is expected to generate 1.89 times more return on investment than Central Garden. However, Natures Sunshine is 1.89 times more volatile than Central Garden Pet. It trades about 0.02 of its potential returns per unit of risk. Central Garden Pet is currently generating about -0.07 per unit of risk. If you would invest 1,524 in Natures Sunshine Products on August 24, 2024 and sell it today you would earn a total of 43.00 from holding Natures Sunshine Products or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natures Sunshine Products vs. Central Garden Pet
Performance |
| Timeline |
| Natures Sunshine Products |
| Central Garden Pet |
Natures Sunshine and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natures Sunshine and Central Garden
The main advantage of trading using opposite Natures Sunshine and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Sunshine position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| Natures Sunshine vs. Seneca Foods Corp | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Associated British Foods |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. John B Sanfilippo |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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