Correlation Between Nu Skin and Procter Gamble

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

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

Diversification Opportunities for Nu Skin and Procter Gamble

0.56

Correlation Coefficient

Nu Skin  Procter Gamble

Very weak diversification

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

Pair Corralation between Nu Skin and Procter Gamble

Considering the 90-day investment horizon Nu Skin Enterprises is expected to under-perform the Procter Gamble. In addition to that, Nu Skin is 3.05 times more volatile than Procter Gamble. It trades about -0.13 of its total potential returns per unit of risk. Procter Gamble is currently generating about -0.04 per unit of volatility. If you would invest  17,076  in Procter Gamble on September 20, 2024 and sell it today you would lose (157.00) from holding Procter Gamble or give up 0.92% of portfolio value over 90 days.

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

Nu Skin Enterprises  vs.  Procter Gamble

Nu Skin Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Skin Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nu Skin is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nu Skin and Procter Gamble

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

The idea behind Nu Skin Enterprises and Procter Gamble 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.