Correlation Between Henkel AG and Nu Skin

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

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

Diversification Opportunities for Henkel AG and Nu Skin

0.56

Correlation Coefficient

Henkel AG  Nu Skin

Very weak diversification

The 3 months correlation between Henkel and NUS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Henkel AG Co and Nu Skin Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Skin Enterprises and Henkel AG 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 Henkel AG Co are associated (or correlated) with Nu Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Skin Enterprises has no effect on the direction of Henkel AG i.e., Henkel AG and Nu Skin go up and down completely randomly.

Pair Corralation between Henkel AG and Nu Skin

Assuming the 90 days horizon Henkel AG is expected to generate 3.8 times less return on investment than Nu Skin. But when comparing it to its historical volatility, Henkel AG Co is 3.69 times less risky than Nu Skin. It trades about 0.06 of its potential returns per unit of risk. Nu Skin Enterprises is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  663.00  in Nu Skin Enterprises on December 28, 2024 and sell it today you would earn a total of  88.00  from holding Nu Skin Enterprises or generate 13.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Henkel AG Co  vs.  Nu Skin Enterprises

Henkel AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Henkel AG Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Henkel AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nu Skin Enterprises

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nu Skin Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Nu Skin unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henkel AG and Nu Skin

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

The idea behind Henkel AG Co and Nu Skin Enterprises 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.