Correlation Between Companhia Brasileira and Natura Co
Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira 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 Companhia Brasileira and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Brasileira de and Natura Co Holding, you can compare the effects of market volatilities on Companhia Brasileira 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 Companhia Brasileira with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and Natura Co.
Diversification Opportunities for Companhia Brasileira and Natura Co
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Companhia and Natura is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de 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 Companhia Brasileira 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 Companhia Brasileira de 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 Companhia Brasileira i.e., Companhia Brasileira and Natura Co go up and down completely randomly.
Pair Corralation between Companhia Brasileira and Natura Co
Assuming the 90 days trading horizon Companhia Brasileira de is expected to under-perform the Natura Co. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Brasileira de is 1.21 times less risky than Natura Co. The stock trades about -0.29 of its potential returns per unit of risk. The Natura Co Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,402 in Natura Co Holding on August 31, 2024 and sell it today you would lose (14.00) from holding Natura Co Holding or give up 1.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Brasileira de vs. Natura Co Holding
Performance |
| Timeline |
| Companhia Brasileira |
| Natura Co Holding |
Companhia Brasileira and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Brasileira and Natura Co
The main advantage of trading using opposite Companhia Brasileira and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira 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.| Companhia Brasileira vs. Atacado SA | Companhia Brasileira vs. Sendas Distribuidora SA | Companhia Brasileira vs. Natura Co Holding | Companhia Brasileira vs. Lojas Renner SA |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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