Correlation Between Mannatech Incorporated and Spectrum Brands

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

By analyzing existing cross correlation between Mannatech Incorporated and Spectrum Brands Holdings, you can compare the effects of market volatilities on Mannatech Incorporated and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mannatech Incorporated and Spectrum Brands.

Diversification Opportunities for Mannatech Incorporated and Spectrum Brands

-0.18

Correlation Coefficient

Mannatech Incorporated  Spectrum Brands

Good diversification

The 3 months correlation between Mannatech and Spectrum is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mannatech Incorporated and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Mannatech Incorporated i.e., Mannatech Incorporated and Spectrum Brands go up and down completely randomly.

Pair Corralation between Mannatech Incorporated and Spectrum Brands

Given the investment horizon of 90 days Mannatech Incorporated is expected to generate 2.55 times more return on investment than Spectrum Brands. However, Mannatech Incorporated is 2.55 times more volatile than Spectrum Brands Holdings. It trades about 0.06 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.01 per unit of risk. If you would invest  776.00  in Mannatech Incorporated on September 3, 2024 and sell it today you would earn a total of  74.00  from holding Mannatech Incorporated or generate 9.54% return on investment over 90 days.

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

Mannatech Incorporated  vs.  Spectrum Brands Holdings

Mannatech Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 4 (%) 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.

Spectrum Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spectrum Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mannatech Incorporated and Spectrum Brands

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

The idea behind Mannatech Incorporated and Spectrum Brands Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.