Correlation Between Energizer Holdings and Natural Health

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

By analyzing existing cross correlation between Energizer Holdings and Natural Health Trend, you can compare the effects of market volatilities on Energizer Holdings and Natural Health 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 Energizer Holdings with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energizer Holdings and Natural Health.

Diversification Opportunities for Energizer Holdings and Natural Health

-0.6

Correlation Coefficient

Energizer Holdings  Natural Health

Excellent diversification

The 3 months correlation between Energizer and Natural is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Energizer Holdings and Natural Health Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trend and Energizer Holdings 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 Energizer Holdings are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trend has no effect on the direction of Energizer Holdings i.e., Energizer Holdings and Natural Health go up and down completely randomly.

Pair Corralation between Energizer Holdings and Natural Health

Considering the 90-day investment horizon Energizer Holdings is expected to generate 0.7 times more return on investment than Natural Health. However, Energizer Holdings is 1.42 times less risky than Natural Health. It trades about 0.17 of its potential returns per unit of risk. Natural Health Trend is currently generating about -0.1 per unit of risk. If you would invest  3,215  in Energizer Holdings on August 30, 2024 and sell it today you would earn a total of  611.00  from holding Energizer Holdings or generate 19.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Energizer Holdings  vs.  Natural Health Trend

Energizer Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energizer Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Energizer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Energizer Holdings and Natural Health

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

The idea behind Energizer Holdings and Natural Health Trend 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.