Correlation Between Mannatech Incorporated and LOreal Co

Can any of the company-specific risk be diversified away by investing in both Mannatech Incorporated and LOreal Co 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 Mannatech Incorporated and LOreal Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mannatech Incorporated and LOreal Co ADR, you can compare the effects of market volatilities on Mannatech Incorporated and LOreal Co 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 Mannatech Incorporated with a short position of LOreal Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mannatech Incorporated and LOreal Co.

Diversification Opportunities for Mannatech Incorporated and LOreal Co

-0.48

Correlation Coefficient

Mannatech Incorporated  LOreal Co

Very good diversification

The 3 months correlation between Mannatech and LOreal is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mannatech Incorporated and LOreal Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOreal Co ADR and Mannatech Incorporated 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 Mannatech Incorporated are associated (or correlated) with LOreal Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOreal Co ADR has no effect on the direction of Mannatech Incorporated i.e., Mannatech Incorporated and LOreal Co go up and down completely randomly.

Pair Corralation between Mannatech Incorporated and LOreal Co

Given the investment horizon of 90 days Mannatech Incorporated is expected to generate 2.4 times more return on investment than LOreal Co. However, Mannatech Incorporated is 2.4 times more volatile than LOreal Co ADR. It trades about 0.13 of its potential returns per unit of risk. LOreal Co ADR is currently generating about -0.09 per unit of risk. If you would invest  760.00  in Mannatech Incorporated on September 15, 2024 and sell it today you would earn a total of  283.00  from holding Mannatech Incorporated or generate 37.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Mannatech Incorporated  vs.  LOreal Co ADR

Mannatech Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Mannatech Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

LOreal Co ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOreal Co ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mannatech Incorporated and LOreal Co

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

The idea behind Mannatech Incorporated and LOreal Co ADR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.