Correlation Between Glanbia Plc and Natures Sunshine

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

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

Diversification Opportunities for Glanbia Plc and Natures Sunshine

-0.84

Correlation Coefficient

Glanbia Plc  Natures Sunshine

Pay attention - limited upside

The 3 months correlation between Glanbia and Natures is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia plc 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 Glanbia Plc 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 Glanbia plc 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 Glanbia Plc i.e., Glanbia Plc and Natures Sunshine go up and down completely randomly.

Pair Corralation between Glanbia Plc and Natures Sunshine

Assuming the 90 days horizon Glanbia Plc is expected to generate 2.83 times less return on investment than Natures Sunshine. But when comparing it to its historical volatility, Glanbia plc is 1.79 times less risky than Natures Sunshine. It trades about 0.03 of its potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  853.00  in Natures Sunshine Products on September 21, 2024 and sell it today you would earn a total of  660.00  from holding Natures Sunshine Products or generate 77.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	71.52%
Values	Daily Returns

Glanbia plc  vs.  Natures Sunshine Products

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Glanbia Plc and Natures Sunshine

The main advantage of trading using opposite Glanbia Plc and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glanbia Plc 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 Glanbia plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..