Correlation Between Herbalife Nutrition and Steakholder Foods

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

By analyzing existing cross correlation between Herbalife Nutrition and Steakholder Foods, you can compare the effects of market volatilities on Herbalife Nutrition and Steakholder Foods 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 Steakholder Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herbalife Nutrition and Steakholder Foods.

Diversification Opportunities for Herbalife Nutrition and Steakholder Foods

-0.65

Correlation Coefficient

Herbalife Nutrition  Steakholder Foods

Excellent diversification

The 3 months correlation between Herbalife and Steakholder is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition and Steakholder Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steakholder Foods 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 Steakholder Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steakholder Foods has no effect on the direction of Herbalife Nutrition i.e., Herbalife Nutrition and Steakholder Foods go up and down completely randomly.

Pair Corralation between Herbalife Nutrition and Steakholder Foods

Considering the 90-day investment horizon Herbalife Nutrition is expected to generate 0.83 times more return on investment than Steakholder Foods. However, Herbalife Nutrition is 1.2 times less risky than Steakholder Foods. It trades about -0.01 of its potential returns per unit of risk. Steakholder Foods is currently generating about -0.07 per unit of risk. If you would invest  821.00  in Herbalife Nutrition on September 4, 2024 and sell it today you would lose (41.00) from holding Herbalife Nutrition or give up 4.99% of portfolio value over 90 days.

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

Herbalife Nutrition  vs.  Steakholder Foods

Herbalife Nutrition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Steakholder Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Steakholder Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Herbalife Nutrition and Steakholder Foods

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

The idea behind Herbalife Nutrition and Steakholder Foods 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.