Correlation Between Nu Skin and Kenvue

Can any of the company-specific risk be diversified away by investing in both Nu Skin and Kenvue 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 Kenvue 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 Kenvue Inc, you can compare the effects of market volatilities on Nu Skin and Kenvue 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 Kenvue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Skin and Kenvue.

Diversification Opportunities for Nu Skin and Kenvue

0.74

Correlation Coefficient

Nu Skin  Kenvue

Poor diversification

The 3 months correlation between NUS and Kenvue is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nu Skin Enterprises and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Nu Skin i.e., Nu Skin and Kenvue go up and down completely randomly.

Pair Corralation between Nu Skin and Kenvue

Considering the 90-day investment horizon Nu Skin Enterprises is expected to under-perform the Kenvue. In addition to that, Nu Skin is 2.51 times more volatile than Kenvue Inc. It trades about -0.02 of its total potential returns per unit of risk. Kenvue Inc is currently generating about 0.04 per unit of volatility. If you would invest  2,089  in Kenvue Inc on January 8, 2025 and sell it today you would earn a total of  60.00  from holding Kenvue Inc or generate 2.87% return on investment over 90 days.

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

Nu Skin Enterprises  vs.  Kenvue Inc

Nu Skin Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nu Skin Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nu Skin is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kenvue Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Kenvue is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nu Skin and Kenvue

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

The idea behind Nu Skin Enterprises and Kenvue Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.