Correlation Between Colgate Palmolive and Natura Co
Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive 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 Colgate Palmolive and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colgate Palmolive and Natura Co Holding, you can compare the effects of market volatilities on Colgate Palmolive 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 Colgate Palmolive with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Natura Co.
Diversification Opportunities for Colgate Palmolive and Natura Co
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Colgate and Natura is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive i.e., Colgate Palmolive and Natura Co go up and down completely randomly.
Pair Corralation between Colgate Palmolive and Natura Co
Assuming the 90 days trading horizon Colgate Palmolive is expected to generate 1.12 times less return on investment than Natura Co. But when comparing it to its historical volatility, Colgate Palmolive is 1.7 times less risky than Natura Co. It trades about 0.04 of its potential returns per unit of risk. Natura Co Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,414 in Natura Co Holding on August 27, 2024 and sell it today you would earn a total of 11.00 from holding Natura Co Holding or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colgate Palmolive vs. Natura Co Holding
Performance |
| Timeline |
| Colgate Palmolive |
| Natura Co Holding |
Colgate Palmolive and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colgate Palmolive and Natura Co
The main advantage of trading using opposite Colgate Palmolive and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive 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.| Colgate Palmolive vs. The Procter Gamble | Colgate Palmolive vs. Unilever PLC | Colgate Palmolive vs. Natura Co Holding | Colgate Palmolive vs. Bombril SA |
| 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |