Correlation Between Natura Co and CCA Industries
Can any of the company-specific risk be diversified away by investing in both Natura Co and CCA Industries 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 Natura Co and CCA Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natura Co Holding and CCA Industries, you can compare the effects of market volatilities on Natura Co and CCA Industries 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 Natura Co with a short position of CCA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and CCA Industries.
Diversification Opportunities for Natura Co and CCA Industries
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natura and CCA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and CCA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCA Industries and Natura Co 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 Natura Co Holding are associated (or correlated) with CCA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCA Industries has no effect on the direction of Natura Co i.e., Natura Co and CCA Industries go up and down completely randomly.
Pair Corralation between Natura Co and CCA Industries
Given the investment horizon of 90 days Natura Co is expected to generate 1.82 times less return on investment than CCA Industries. But when comparing it to its historical volatility, Natura Co Holding is 2.56 times less risky than CCA Industries. It trades about 0.12 of its potential returns per unit of risk. CCA Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 66.00 in CCA Industries on September 3, 2024 and sell it today you would earn a total of 11.00 from holding CCA Industries or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 25.49% |
| Values | Daily Returns |
Natura Co Holding vs. CCA Industries
Performance |
| Timeline |
| Natura Co Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CCA Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Natura Co and CCA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natura Co and CCA Industries
The main advantage of trading using opposite Natura Co and CCA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, CCA Industries 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 CCA Industries will offset losses from the drop in CCA Industries' long position.| Natura Co vs. Mannatech Incorporated | Natura Co vs. Edgewell Personal Care | Natura Co vs. Inter Parfums | Natura Co vs. Nu Skin Enterprises |
| CCA Industries vs. Firan Technology Group | CCA Industries vs. FitLife Brands, Common | CCA Industries vs. ENB Financial Corp | CCA Industries vs. Surge Components |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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