Correlation Between FEMALE HEALTH and Nintendo

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

By analyzing existing cross correlation between FEMALE HEALTH and Nintendo Co, you can compare the effects of market volatilities on FEMALE HEALTH and Nintendo 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 FEMALE HEALTH with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEMALE HEALTH and Nintendo.

Diversification Opportunities for FEMALE HEALTH and Nintendo

-0.29

Correlation Coefficient

FEMALE HEALTH  Nintendo

Very good diversification

The 3 months correlation between FEMALE and Nintendo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FEMALE HEALTH and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and FEMALE HEALTH 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 FEMALE HEALTH are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of FEMALE HEALTH i.e., FEMALE HEALTH and Nintendo go up and down completely randomly.

Pair Corralation between FEMALE HEALTH and Nintendo

Assuming the 90 days trading horizon FEMALE HEALTH is expected to generate 1.43 times less return on investment than Nintendo. In addition to that, FEMALE HEALTH is 3.38 times more volatile than Nintendo Co. It trades about 0.02 of its total potential returns per unit of risk. Nintendo Co is currently generating about 0.07 per unit of volatility. If you would invest  3,937  in Nintendo Co on October 5, 2024 and sell it today you would earn a total of  1,773  from holding Nintendo Co or generate 45.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

FEMALE HEALTH  vs.  Nintendo Co

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nintendo

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nintendo Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Nintendo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FEMALE HEALTH and Nintendo

The main advantage of trading using opposite FEMALE HEALTH and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEMALE HEALTH position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.

The idea behind FEMALE HEALTH and Nintendo Co 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.