Correlation Between Central Garden and Coty
Can any of the company-specific risk be diversified away by investing in both Central Garden and Coty 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 Central Garden and Coty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Coty Inc, you can compare the effects of market volatilities on Central Garden and Coty 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 Central Garden with a short position of Coty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Coty.
Diversification Opportunities for Central Garden and Coty
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Coty is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Central Garden 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 Central Garden Pet are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Central Garden i.e., Central Garden and Coty go up and down completely randomly.
Pair Corralation between Central Garden and Coty
Given the investment horizon of 90 days Central Garden Pet is expected to generate 0.78 times more return on investment than Coty. However, Central Garden Pet is 1.28 times less risky than Coty. It trades about 0.4 of its potential returns per unit of risk. Coty Inc is currently generating about -0.02 per unit of risk. If you would invest 3,517 in Central Garden Pet on September 3, 2024 and sell it today you would earn a total of 458.00 from holding Central Garden Pet or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Coty Inc
Performance |
| Timeline |
| Central Garden Pet |
| Coty Inc |
Central Garden and Coty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Coty
The main advantage of trading using opposite Central Garden and Coty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Coty 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 Coty will offset losses from the drop in Coty's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. McCormick Company Incorporated | Central Garden vs. Natures Sunshine Products | Central Garden vs. Seneca Foods Corp |
| Coty vs. Highway Holdings Limited | Coty vs. QCR Holdings | Coty vs. Partner Communications | Coty vs. Acumen Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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