Correlation Between Natures Sunshine and Simply Good

Can any of the company-specific risk be diversified away by investing in both Natures Sunshine and Simply Good 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 Simply Good 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 Simply Good Foods, you can compare the effects of market volatilities on Natures Sunshine and Simply Good 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 Simply Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Sunshine and Simply Good.

Diversification Opportunities for Natures Sunshine and Simply Good

0.92

Correlation Coefficient

Natures Sunshine  Simply Good

Almost no diversification

The 3 months correlation between Natures and Simply is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Natures Sunshine i.e., Natures Sunshine and Simply Good go up and down completely randomly.

Pair Corralation between Natures Sunshine and Simply Good

Given the investment horizon of 90 days Natures Sunshine Products is expected to generate 1.73 times more return on investment than Simply Good. However, Natures Sunshine is 1.73 times more volatile than Simply Good Foods. It trades about 0.05 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.01 per unit of risk. If you would invest  839.00  in Natures Sunshine Products on September 19, 2024 and sell it today you would earn a total of  659.00  from holding Natures Sunshine Products or generate 78.55% return on investment over 90 days.

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

Natures Sunshine Products  vs.  Simply Good Foods

Natures Sunshine Products

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Natures Sunshine Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Natures Sunshine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simply Good Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simply Good Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Simply Good disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natures Sunshine and Simply Good

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

The idea behind Natures Sunshine Products and Simply Good 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.