Correlation Between Tattooed Chef and Herbalife Nutrition

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Can any of the company-specific risk be diversified away by investing in both Tattooed Chef and Herbalife Nutrition 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 Tattooed Chef and Herbalife Nutrition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tattooed Chef and Herbalife Nutrition, you can compare the effects of market volatilities on Tattooed Chef and Herbalife Nutrition 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 Tattooed Chef with a short position of Herbalife Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tattooed Chef and Herbalife Nutrition.

Diversification Opportunities for Tattooed Chef and Herbalife Nutrition

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tattooed and Herbalife is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tattooed Chef and Herbalife Nutrition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herbalife Nutrition and Tattooed Chef 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 Tattooed Chef are associated (or correlated) with Herbalife Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herbalife Nutrition has no effect on the direction of Tattooed Chef i.e., Tattooed Chef and Herbalife Nutrition go up and down completely randomly.

Pair Corralation between Tattooed Chef and Herbalife Nutrition

If you would invest  7.01  in Tattooed Chef on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Tattooed Chef or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

Tattooed Chef  vs.  Herbalife Nutrition

 Performance 
       Timeline  
Tattooed Chef 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tattooed Chef has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Tattooed Chef is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Herbalife Nutrition 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Herbalife Nutrition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Herbalife Nutrition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tattooed Chef and Herbalife Nutrition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tattooed Chef and Herbalife Nutrition

The main advantage of trading using opposite Tattooed Chef and Herbalife Nutrition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tattooed Chef position performs unexpectedly, Herbalife Nutrition 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 Herbalife Nutrition will offset losses from the drop in Herbalife Nutrition's long position.
The idea behind Tattooed Chef and Herbalife Nutrition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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