Correlation Between Quaker Chemical and Natural Health
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Natural Health 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 Quaker Chemical and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Natural Health Trends, you can compare the effects of market volatilities on Quaker Chemical and Natural Health 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 Quaker Chemical with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Natural Health.
Diversification Opportunities for Quaker Chemical and Natural Health
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Quaker and Natural is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Natural Health go up and down completely randomly.
Pair Corralation between Quaker Chemical and Natural Health
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Natural Health. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.34 times less risky than Natural Health. The stock trades about 0.0 of its potential returns per unit of risk. The Natural Health Trends is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Natural Health Trends on September 3, 2024 and sell it today you would earn a total of 246.00 from holding Natural Health Trends or generate 93.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Natural Health Trends
Performance |
| Timeline |
| Quaker Chemical |
| Natural Health Trends |
Quaker Chemical and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Natural Health
The main advantage of trading using opposite Quaker Chemical and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| Quaker Chemical vs. COMMERCIAL VEHICLE | Quaker Chemical vs. MOLSON RS BEVERAGE | Quaker Chemical vs. SENECA FOODS A | Quaker Chemical vs. TYSON FOODS A |
| Natural Health vs. CITY OFFICE REIT | Natural Health vs. WillScot Mobile Mini | Natural Health vs. KIMBALL ELECTRONICS | Natural Health vs. ELECTRONIC ARTS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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