Correlation Between Whole Earth and Natures Sunshine

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

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

Diversification Opportunities for Whole Earth and Natures Sunshine

-0.11

Correlation Coefficient

Whole Earth  Natures Sunshine

Good diversification

The 3 months correlation between Whole and Natures is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Whole Earth Brands 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 Whole Earth 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 Whole Earth Brands 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 Whole Earth i.e., Whole Earth and Natures Sunshine go up and down completely randomly.

Pair Corralation between Whole Earth and Natures Sunshine

Given the investment horizon of 90 days Whole Earth Brands is expected to under-perform the Natures Sunshine. In addition to that, Whole Earth is 2.23 times more volatile than Natures Sunshine Products. It trades about -0.01 of its total potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.04 per unit of volatility. If you would invest  1,053  in Natures Sunshine Products on October 23, 2024 and sell it today you would earn a total of  418.00  from holding Natures Sunshine Products or generate 39.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.95%
Values	Daily Returns

Whole Earth Brands  vs.  Natures Sunshine Products

Whole Earth Brands

Risk-Adjusted Performance

0 of 100

Very Weak

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

Natures Sunshine Products

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Sunshine Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Natures Sunshine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Whole Earth and Natures Sunshine

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

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..