Correlation Between Natures Sunshine and Helen Of

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

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

Diversification Opportunities for Natures Sunshine and Helen Of

0.45

Correlation Coefficient

Natures Sunshine  Helen Of

Very weak diversification

The 3 months correlation between Natures and Helen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products and Helen of Troy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helen of Troy and Natures Sunshine 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 Natures Sunshine Products are associated (or correlated) with Helen Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helen of Troy has no effect on the direction of Natures Sunshine i.e., Natures Sunshine and Helen Of go up and down completely randomly.

Pair Corralation between Natures Sunshine and Helen Of

Given the investment horizon of 90 days Natures Sunshine Products is expected to generate 1.13 times more return on investment than Helen Of. However, Natures Sunshine is 1.13 times more volatile than Helen of Troy. It trades about -0.35 of its potential returns per unit of risk. Helen of Troy is currently generating about -0.77 per unit of risk. If you would invest  1,676  in Natures Sunshine Products on October 1, 2024 and sell it today you would lose (174.00) from holding Natures Sunshine Products or give up 10.38% of portfolio value over 90 days.

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

Natures Sunshine Products  vs.  Helen of Troy

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.

Helen of Troy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helen of Troy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Helen Of is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Natures Sunshine and Helen Of

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

The idea behind Natures Sunshine Products and Helen of Troy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.