Correlation Between United States and Natural Health
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Natural Health Trends, you can compare the effects of market volatilities on United States 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 United States with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Natural Health.
Diversification Opportunities for United States and Natural Health
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Natural is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Natural Health go up and down completely randomly.
Pair Corralation between United States and Natural Health
Assuming the 90 days trading horizon United States is expected to generate 1.34 times less return on investment than Natural Health. In addition to that, United States is 1.04 times more volatile than Natural Health Trends. It trades about 0.03 of its total potential returns per unit of risk. Natural Health Trends is currently generating about 0.04 per unit of volatility. If you would invest 302.00 in Natural Health Trends on October 15, 2024 and sell it today you would earn a total of 140.00 from holding Natural Health Trends or generate 46.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Natural Health Trends
Performance |
| Timeline |
| United States Steel |
| Natural Health Trends |
United States and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Natural Health
The main advantage of trading using opposite United States and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. WillScot Mobile Mini | United States vs. United Breweries Co | United States vs. Thai Beverage Public | United States vs. THAI BEVERAGE |
| Natural Health vs. Nok Airlines PCL | Natural Health vs. DALATA HOTEL | Natural Health vs. Meli Hotels International | Natural Health vs. AEGEAN AIRLINES |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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