Correlation Between METISA Metalrgica and Natura Co
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and Natura Co Holding, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Natura Co.
Diversification Opportunities for METISA Metalrgica and Natura Co
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METISA and Natura is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense 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 METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and Natura Co go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Natura Co
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Natura Co. But the preferred stock apears to be less risky and, when comparing its historical volatility, METISA Metalrgica Timboense is 1.09 times less risky than Natura Co. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Natura Co Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,311 in Natura Co Holding on September 2, 2024 and sell it today you would earn a total of 77.00 from holding Natura Co Holding or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Natura Co Holding
Performance |
| Timeline |
| METISA Metalrgica |
| Natura Co Holding |
METISA Metalrgica and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Natura Co
The main advantage of trading using opposite METISA Metalrgica and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi SA |
| Natura Co vs. The Procter Gamble | Natura Co vs. Bombril SA | Natura Co vs. Mundial SA | Natura Co vs. Hrcules 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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