Correlation Between Nestle SA and Natures Sunshine
Can any of the company-specific risk be diversified away by investing in both Nestle SA and Natures Sunshine 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 Nestle SA and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nestle SA and Natures Sunshine Products, you can compare the effects of market volatilities on Nestle SA and Natures Sunshine 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 Nestle SA with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestle SA and Natures Sunshine.
Diversification Opportunities for Nestle SA and Natures Sunshine
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nestle and Natures is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nestle SA and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products and Nestle SA 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 Nestle SA are associated (or correlated) with Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of Nestle SA i.e., Nestle SA and Natures Sunshine go up and down completely randomly.
Pair Corralation between Nestle SA and Natures Sunshine
Assuming the 90 days horizon Nestle SA is expected to under-perform the Natures Sunshine. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nestle SA is 4.52 times less risky than Natures Sunshine. The pink sheet trades about -0.39 of its potential returns per unit of risk. The Natures Sunshine Products is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,299 in Natures Sunshine Products on September 4, 2024 and sell it today you would earn a total of 377.00 from holding Natures Sunshine Products or generate 29.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nestle SA vs. Natures Sunshine Products
Performance |
| Timeline |
| Nestle SA |
| Natures Sunshine Products |
Nestle SA and Natures Sunshine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nestle SA and Natures Sunshine
The main advantage of trading using opposite Nestle SA and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestle SA position performs unexpectedly, Natures Sunshine 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 Natures Sunshine will offset losses from the drop in Natures Sunshine's long position.| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
| Natures Sunshine vs. Seneca Foods Corp | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Associated British Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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