Correlation Between Smart For and Bon Natural

Can any of the company-specific risk be diversified away by investing in both Smart For and Bon Natural 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 Smart For and Bon Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smart for Life, and Bon Natural Life, you can compare the effects of market volatilities on Smart For and Bon Natural 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 Smart For with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart For and Bon Natural.

Diversification Opportunities for Smart For and Bon Natural

0.51

Correlation Coefficient

Smart For  Bon Natural

Very weak diversification

The 3 months correlation between Smart and Bon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Smart For 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 Smart for Life, are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Smart For i.e., Smart For and Bon Natural go up and down completely randomly.

Pair Corralation between Smart For and Bon Natural

Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Bon Natural. In addition to that, Smart For is 4.91 times more volatile than Bon Natural Life. It trades about -0.42 of its total potential returns per unit of risk. Bon Natural Life is currently generating about -0.02 per unit of volatility. If you would invest  180.00  in Bon Natural Life on September 4, 2024 and sell it today you would lose (27.00) from holding Bon Natural Life or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	28.13%
Values	Daily Returns

Smart for Life,  vs.  Bon Natural Life

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bon Natural Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Smart For and Bon Natural

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

The idea behind Smart for Life, and Bon Natural Life 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.