Correlation Between Nu Skin and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Nu Skin and Colgate Palmolive 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 Nu Skin and Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nu Skin Enterprises and Colgate Palmolive, you can compare the effects of market volatilities on Nu Skin and Colgate Palmolive 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 Nu Skin with a short position of Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Skin and Colgate Palmolive.
Diversification Opportunities for Nu Skin and Colgate Palmolive
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NUS and Colgate is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive and Nu Skin 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 Nu Skin Enterprises are associated (or correlated) with Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Nu Skin i.e., Nu Skin and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Nu Skin and Colgate Palmolive
Considering the 90-day investment horizon Nu Skin Enterprises is expected to under-perform the Colgate Palmolive. In addition to that, Nu Skin is 4.2 times more volatile than Colgate Palmolive. It trades about -0.01 of its total potential returns per unit of risk. Colgate Palmolive is currently generating about 0.1 per unit of volatility. If you would invest 8,461 in Colgate Palmolive on January 20, 2024 and sell it today you would earn a total of 210.00 from holding Colgate Palmolive or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nu Skin Enterprises vs. Colgate Palmolive
Performance |
| Timeline |
| Nu Skin Enterprises |
| Colgate Palmolive |
Nu Skin and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nu Skin and Colgate Palmolive
The main advantage of trading using opposite Nu Skin and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nu Skin position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Nu Skin vs. Seneca Foods Corp | Nu Skin vs. Central Garden Pet | Nu Skin vs. Central Garden Pet | Nu Skin vs. Lifeway Foods |
| Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Estee Lauder Companies | Colgate Palmolive vs. ELF Beauty | Colgate Palmolive vs. Coty Inc |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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