Correlation Between Herbalife Nutrition and Apple
Can any of the company-specific risk be diversified away by investing in both Herbalife Nutrition and Apple 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 Herbalife Nutrition and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herbalife Nutrition and Apple Inc, you can compare the effects of market volatilities on Herbalife Nutrition and Apple 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 Herbalife Nutrition with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herbalife Nutrition and Apple.
Diversification Opportunities for Herbalife Nutrition and Apple
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herbalife and Apple is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Herbalife Nutrition and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Herbalife Nutrition 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 Herbalife Nutrition are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Herbalife Nutrition i.e., Herbalife Nutrition and Apple go up and down completely randomly.
Pair Corralation between Herbalife Nutrition and Apple
Considering the 90-day investment horizon Herbalife Nutrition is expected to generate 2.69 times more return on investment than Apple. However, Herbalife Nutrition is 2.69 times more volatile than Apple Inc. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about -0.14 per unit of risk. If you would invest 870.00 in Herbalife Nutrition on January 19, 2024 and sell it today you would lose (11.00) from holding Herbalife Nutrition or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herbalife Nutrition vs. Apple Inc
Performance |
| Timeline |
| Herbalife Nutrition |
| Apple Inc |
Herbalife Nutrition and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herbalife Nutrition and Apple
The main advantage of trading using opposite Herbalife Nutrition and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herbalife Nutrition position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Herbalife Nutrition vs. Seneca Foods Corp | Herbalife Nutrition vs. Natures Sunshine Products | Herbalife Nutrition vs. Associated British Foods | Herbalife Nutrition vs. Nomad Foods |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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