Correlation Between FitLife Brands, and Natures Sunshine

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

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

Diversification Opportunities for FitLife Brands, and Natures Sunshine

0.39

Correlation Coefficient

FitLife Brands,  Natures Sunshine

Weak diversification

The 3 months correlation between FitLife and Natures is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common 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 FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Natures Sunshine go up and down completely randomly.

Pair Corralation between FitLife Brands, and Natures Sunshine

Given the investment horizon of 90 days FitLife Brands, Common is expected to generate 0.92 times more return on investment than Natures Sunshine. However, FitLife Brands, Common is 1.09 times less risky than Natures Sunshine. It trades about 0.06 of its potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.05 per unit of risk. If you would invest  1,750  in FitLife Brands, Common on October 5, 2024 and sell it today you would earn a total of  1,466  from holding FitLife Brands, Common or generate 83.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.58%
Values	Daily Returns

FitLife Brands, Common  vs.  Natures Sunshine Products

FitLife Brands, Common

Risk-Adjusted Performance

0 of 100

Very Weak

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

Natures Sunshine Products

Risk-Adjusted Performance

5 of 100

Insignificant

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 FitLife Brands, and Natures Sunshine

The main advantage of trading using opposite FitLife Brands, and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, 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 FitLife Brands, Common 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.