Correlation Between Hormel Foods and Natura Co
Can any of the company-specific risk be diversified away by investing in both Hormel Foods 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 Hormel Foods and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Natura Co Holding, you can compare the effects of market volatilities on Hormel Foods 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 Hormel Foods with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Natura Co.
Diversification Opportunities for Hormel Foods and Natura Co
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hormel and Natura is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods 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 Hormel Foods 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 Hormel Foods 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 Hormel Foods i.e., Hormel Foods and Natura Co go up and down completely randomly.
Pair Corralation between Hormel Foods and Natura Co
Assuming the 90 days trading horizon Hormel Foods is expected to under-perform the Natura Co. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.77 times less risky than Natura Co. The stock trades about -0.39 of its potential returns per unit of risk. The Natura Co Holding is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 1,312 in Natura Co Holding on October 22, 2024 and sell it today you would lose (71.00) from holding Natura Co Holding or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Natura Co Holding
Performance |
| Timeline |
| Hormel Foods |
| Natura Co Holding |
Hormel Foods and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Natura Co
The main advantage of trading using opposite Hormel Foods and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods 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.| Hormel Foods vs. Zoom Video Communications | Hormel Foods vs. Patria Investments Limited | Hormel Foods vs. MAHLE Metal Leve | Hormel Foods vs. Vulcan Materials |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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