Correlation Between Nu Skin and Central Garden
Can any of the company-specific risk be diversified away by investing in both Nu Skin 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 Nu Skin and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Skin Enterprises and Central Garden Pet, you can compare the effects of market volatilities on Nu Skin 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 Nu Skin with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Skin and Central Garden.
Diversification Opportunities for Nu Skin and Central Garden
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NUS and Central is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises 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 Nu Skin 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 Nu Skin Enterprises 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 Nu Skin i.e., Nu Skin and Central Garden go up and down completely randomly.
Pair Corralation between Nu Skin and Central Garden
Considering the 90-day investment horizon Nu Skin Enterprises is expected to generate 2.21 times more return on investment than Central Garden. However, Nu Skin is 2.21 times more volatile than Central Garden Pet. It trades about 0.31 of its potential returns per unit of risk. Central Garden Pet is currently generating about 0.41 per unit of risk. If you would invest 618.00 in Nu Skin Enterprises on August 27, 2024 and sell it today you would earn a total of 137.00 from holding Nu Skin Enterprises or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Skin Enterprises vs. Central Garden Pet
Performance |
| Timeline |
| Nu Skin Enterprises |
| Central Garden Pet |
Nu Skin and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Skin and Central Garden
The main advantage of trading using opposite Nu Skin and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Skin 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.| Nu Skin vs. Honest Company | Nu Skin vs. Hims Hers Health | Nu Skin vs. Procter Gamble | Nu Skin vs. Kimberly Clark |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. McCormick Company Incorporated | Central Garden vs. Natures Sunshine Products | Central Garden vs. Seneca Foods Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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