Correlation Between Natura Co and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Natura Co and Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive, you can compare the effects of market volatilities on Natura Co and Colgate Palmolive 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 Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Colgate Palmolive.
Diversification Opportunities for Natura Co and Colgate Palmolive
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natura and Colgate is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Natura Co i.e., Natura Co and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Natura Co and Colgate Palmolive
Assuming the 90 days trading horizon Natura Co Holding is expected to under-perform the Colgate Palmolive. In addition to that, Natura Co is 2.08 times more volatile than Colgate Palmolive. It trades about -0.03 of its total potential returns per unit of risk. Colgate Palmolive is currently generating about 0.19 per unit of volatility. If you would invest 7,824 in Colgate Palmolive on August 31, 2024 and sell it today you would earn a total of 476.00 from holding Colgate Palmolive or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Natura Co Holding vs. Colgate Palmolive
Performance |
| Timeline |
| Natura Co Holding |
| Colgate Palmolive |
Natura Co and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natura Co and Colgate Palmolive
The main advantage of trading using opposite Natura Co and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Natura Co vs. Metalrgica Riosulense SA | Natura Co vs. Charter Communications | Natura Co vs. METISA Metalrgica Timboense | Natura Co vs. Extra Space Storage |
| Colgate Palmolive vs. Sumitomo Mitsui Financial | Colgate Palmolive vs. METISA Metalrgica Timboense | Colgate Palmolive vs. Deutsche Bank Aktiengesellschaft | Colgate Palmolive vs. Brpr Corporate Offices |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| 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 |