Correlation Between Nu Skin and Spectrum Brands
Can any of the company-specific risk be diversified away by investing in both Nu Skin and Spectrum Brands 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 Spectrum Brands 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 Spectrum Brands Holdings, you can compare the effects of market volatilities on Nu Skin and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Skin and Spectrum Brands.
Diversification Opportunities for Nu Skin and Spectrum Brands
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NUS and Spectrum is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Nu Skin i.e., Nu Skin and Spectrum Brands go up and down completely randomly.
Pair Corralation between Nu Skin and Spectrum Brands
Considering the 90-day investment horizon Nu Skin Enterprises is expected to under-perform the Spectrum Brands. In addition to that, Nu Skin is 1.72 times more volatile than Spectrum Brands Holdings. It trades about -0.12 of its total potential returns per unit of risk. Spectrum Brands Holdings is currently generating about 0.04 per unit of volatility. If you would invest 7,230 in Spectrum Brands Holdings on August 27, 2024 and sell it today you would earn a total of 1,815 from holding Spectrum Brands Holdings or generate 25.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Skin Enterprises vs. Spectrum Brands Holdings
Performance |
| Timeline |
| Nu Skin Enterprises |
| Spectrum Brands Holdings |
Nu Skin and Spectrum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Skin and Spectrum Brands
The main advantage of trading using opposite Nu Skin and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Skin position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.| Nu Skin vs. Honest Company | Nu Skin vs. Hims Hers Health | Nu Skin vs. Procter Gamble | Nu Skin vs. Kimberly Clark |
| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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