Correlation Between Natural Health and FORWARD AIR

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

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

Diversification Opportunities for Natural Health and FORWARD AIR

0.48

Correlation Coefficient

Natural Health  FORWARD AIR

Very weak diversification

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

Pair Corralation between Natural Health and FORWARD AIR

Assuming the 90 days trading horizon Natural Health Trends is expected to generate 0.44 times more return on investment than FORWARD AIR. However, Natural Health Trends is 2.25 times less risky than FORWARD AIR. It trades about 0.0 of its potential returns per unit of risk. FORWARD AIR P is currently generating about -0.02 per unit of risk. If you would invest  457.00  in Natural Health Trends on September 25, 2024 and sell it today you would lose (37.00) from holding Natural Health Trends or give up 8.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Natural Health Trends  vs.  FORWARD AIR P

Natural Health Trends

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORWARD AIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Natural Health and FORWARD AIR

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

The idea behind Natural Health Trends and FORWARD AIR P 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..