Correlation Between Natura Co and Bath Body
Can any of the company-specific risk be diversified away by investing in both Natura Co and Bath Body 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 Bath Body 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 Bath Body Works, you can compare the effects of market volatilities on Natura Co and Bath Body 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 Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Bath Body.
Diversification Opportunities for Natura Co and Bath Body
Good diversification
The 3 months correlation between Natura and Bath is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works 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 Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Natura Co i.e., Natura Co and Bath Body go up and down completely randomly.
Pair Corralation between Natura Co and Bath Body
Assuming the 90 days trading horizon Natura Co Holding is expected to under-perform the Bath Body. But the stock apears to be less risky and, when comparing its historical volatility, Natura Co Holding is 1.24 times less risky than Bath Body. The stock trades about -0.11 of its potential returns per unit of risk. The Bath Body Works is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,512 in Bath Body Works on September 14, 2024 and sell it today you would earn a total of 1,387 from holding Bath Body Works or generate 30.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natura Co Holding vs. Bath Body Works
Performance |
| Timeline |
| Natura Co Holding |
| Bath Body Works |
Natura Co and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natura Co and Bath Body
The main advantage of trading using opposite Natura Co and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.| Natura Co vs. The Procter Gamble | Natura Co vs. Unilever PLC | Natura Co vs. The Este Lauder | Natura Co vs. Colgate Palmolive |
| Bath Body vs. Mliuz SA | Bath Body vs. Natura Co Holding | Bath Body vs. Rede DOr So | Bath Body vs. Locaweb Servios de |
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.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |