Correlation Between Simply Good and Natures Sunshine
Can any of the company-specific risk be diversified away by investing in both Simply Good 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 Simply Good and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Good Foods and Natures Sunshine Products, you can compare the effects of market volatilities on Simply Good 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 Simply Good with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Natures Sunshine.
Diversification Opportunities for Simply Good and Natures Sunshine
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simply and Natures is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods 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 Simply Good 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 Simply Good Foods 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 Simply Good i.e., Simply Good and Natures Sunshine go up and down completely randomly.
Pair Corralation between Simply Good and Natures Sunshine
Given the investment horizon of 90 days Simply Good is expected to generate 1.16 times less return on investment than Natures Sunshine. But when comparing it to its historical volatility, Simply Good Foods is 3.44 times less risky than Natures Sunshine. It trades about 0.53 of its potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,359 in Natures Sunshine Products on August 30, 2024 and sell it today you would earn a total of 256.00 from holding Natures Sunshine Products or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Good Foods vs. Natures Sunshine Products
Performance |
| Timeline |
| Simply Good Foods |
| Natures Sunshine Products |
Simply Good and Natures Sunshine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and Natures Sunshine
The main advantage of trading using opposite Simply Good and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good 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.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| Natures Sunshine vs. ELF Beauty | Natures Sunshine vs. Procter Gamble | Natures Sunshine vs. Colgate Palmolive | Natures Sunshine vs. Kenvue Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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