Correlation Between ConAgra Foods and Natures Sunshine

Can any of the company-specific risk be diversified away by investing in both ConAgra Foods 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 ConAgra Foods and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConAgra Foods and Natures Sunshine Products, you can compare the effects of market volatilities on ConAgra Foods 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 ConAgra Foods with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Natures Sunshine.

Diversification Opportunities for ConAgra Foods and Natures Sunshine

-0.71

Correlation Coefficient

ConAgra Foods  Natures Sunshine

Pay attention - limited upside

The 3 months correlation between ConAgra and Natures is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra 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 ConAgra Foods 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 ConAgra 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 ConAgra Foods i.e., ConAgra Foods and Natures Sunshine go up and down completely randomly.

Pair Corralation between ConAgra Foods and Natures Sunshine

Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Natures Sunshine. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 2.3 times less risky than Natures Sunshine. The stock trades about -0.04 of its potential returns per unit of risk. The Natures Sunshine Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Natures Sunshine Products on October 4, 2024 and sell it today you would earn a total of  457.00  from holding Natures Sunshine Products or generate 45.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ConAgra Foods  vs.  Natures Sunshine Products

ConAgra Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Natures Sunshine Products

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Sunshine Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Natures Sunshine may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ConAgra Foods and Natures Sunshine

The main advantage of trading using opposite ConAgra Foods and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods 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.

The idea behind ConAgra Foods and Natures Sunshine Products 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.