Correlation Between Herbalife Nutrition and Nu Skin

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

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

Diversification Opportunities for Herbalife Nutrition and Nu Skin

0.76

Correlation Coefficient

Herbalife Nutrition  Nu Skin

Poor diversification

The 3 months correlation between Herbalife and NUS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition 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 Herbalife Nutrition 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 Herbalife Nutrition 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 Herbalife Nutrition i.e., Herbalife Nutrition and Nu Skin go up and down completely randomly.

Pair Corralation between Herbalife Nutrition and Nu Skin

Considering the 90-day investment horizon Herbalife Nutrition is expected to generate 1.03 times less return on investment than Nu Skin. In addition to that, Herbalife Nutrition is 1.42 times more volatile than Nu Skin Enterprises. It trades about 0.04 of its total potential returns per unit of risk. Nu Skin Enterprises is currently generating about 0.06 per unit of volatility. If you would invest  724.00  in Nu Skin Enterprises on November 28, 2024 and sell it today you would earn a total of  84.00  from holding Nu Skin Enterprises or generate 11.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Herbalife Nutrition  vs.  Nu Skin Enterprises

Herbalife Nutrition

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Herbalife Nutrition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Herbalife Nutrition reported solid returns over the last few months and may actually be approaching a breakup point.

Nu Skin Enterprises

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nu Skin Enterprises are ranked lower than 4 (%) 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 Herbalife Nutrition and Nu Skin

The main advantage of trading using opposite Herbalife Nutrition and Nu Skin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herbalife Nutrition 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 Herbalife Nutrition 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..