Correlation Between Banco BTG and Natura Co
Can any of the company-specific risk be diversified away by investing in both Banco BTG and Natura Co 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 Banco BTG and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco BTG Pactual and Natura Co Holding, you can compare the effects of market volatilities on Banco BTG and Natura Co 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 Banco BTG with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco BTG and Natura Co.
Diversification Opportunities for Banco BTG and Natura Co
Very good diversification
The 3 months correlation between Banco and Natura is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding and Banco BTG 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 Banco BTG Pactual are associated (or correlated) with Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Banco BTG i.e., Banco BTG and Natura Co go up and down completely randomly.
Pair Corralation between Banco BTG and Natura Co
Assuming the 90 days trading horizon Banco BTG Pactual is expected to under-perform the Natura Co. But the stock apears to be less risky and, when comparing its historical volatility, Banco BTG Pactual is 1.54 times less risky than Natura Co. The stock trades about -0.1 of its potential returns per unit of risk. The Natura Co Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,388 in Natura Co Holding on August 28, 2024 and sell it today you would earn a total of 57.00 from holding Natura Co Holding or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco BTG Pactual vs. Natura Co Holding
Performance |
| Timeline |
| Banco BTG Pactual |
| Natura Co Holding |
Banco BTG and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco BTG and Natura Co
The main advantage of trading using opposite Banco BTG and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco BTG position performs unexpectedly, Natura Co 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 Natura Co will offset losses from the drop in Natura Co's long position.The idea behind Banco BTG Pactual and Natura Co Holding 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.| Natura Co vs. The Procter Gamble | Natura Co vs. Unilever PLC | Natura Co vs. Colgate Palmolive | Natura Co vs. Bombril SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |