Correlation Between Bon Natural and Natures Sunshine
Can any of the company-specific risk be diversified away by investing in both Bon Natural and Natures Sunshine 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 Bon Natural and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bon Natural Life and Natures Sunshine Products, you can compare the effects of market volatilities on Bon Natural and Natures Sunshine 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 Bon Natural with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bon Natural and Natures Sunshine.
Diversification Opportunities for Bon Natural and Natures Sunshine
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bon and Natures is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products and Bon Natural 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 Bon Natural Life are associated (or correlated) with Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of Bon Natural i.e., Bon Natural and Natures Sunshine go up and down completely randomly.
Pair Corralation between Bon Natural and Natures Sunshine
Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Natures Sunshine. In addition to that, Bon Natural is 7.21 times more volatile than Natures Sunshine Products. It trades about -0.12 of its total potential returns per unit of risk. Natures Sunshine Products is currently generating about -0.1 per unit of volatility. If you would invest 1,974 in Natures Sunshine Products on February 5, 2024 and sell it today you would lose (68.00) from holding Natures Sunshine Products or give up 3.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bon Natural Life vs. Natures Sunshine Products
Performance |
Timeline |
Bon Natural Life |
Natures Sunshine Products |
Bon Natural and Natures Sunshine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bon Natural and Natures Sunshine
The main advantage of trading using opposite Bon Natural and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural position performs unexpectedly, Natures Sunshine 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 Natures Sunshine will offset losses from the drop in Natures Sunshine's long position.Bon Natural vs. Green Globe International | Bon Natural vs. Greenlane Holdings | Bon Natural vs. 22nd Century Group | Bon Natural vs. 1606 Corp |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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