Correlation Between Mannatech Incorporated and ELF Beauty

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

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

Diversification Opportunities for Mannatech Incorporated and ELF Beauty

-0.36

Correlation Coefficient

Mannatech Incorporated  ELF Beauty

Very good diversification

The 3 months correlation between Mannatech and ELF is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mannatech Incorporated and ELF Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELF Beauty 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 ELF Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELF Beauty has no effect on the direction of Mannatech Incorporated i.e., Mannatech Incorporated and ELF Beauty go up and down completely randomly.

Pair Corralation between Mannatech Incorporated and ELF Beauty

Given the investment horizon of 90 days Mannatech Incorporated is expected to generate 2.07 times less return on investment than ELF Beauty. But when comparing it to its historical volatility, Mannatech Incorporated is 1.03 times less risky than ELF Beauty. It trades about 0.07 of its potential returns per unit of risk. ELF Beauty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,541  in ELF Beauty on August 10, 2024 and sell it today you would earn a total of  1,066  from holding ELF Beauty or generate 10.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Mannatech Incorporated  vs.  ELF Beauty

Mannatech Incorporated

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 8 (%) 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.

ELF Beauty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELF Beauty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mannatech Incorporated and ELF Beauty

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

The idea behind Mannatech Incorporated and ELF Beauty 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 Commodity Directory module to find actively traded commodities issued by global exchanges.