Correlation Between Spotify Technology and Natura Co
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Natura Co Holding, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Natura Co.
Diversification Opportunities for Spotify Technology and Natura Co
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spotify and Natura is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA 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 Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and Natura Co go up and down completely randomly.
Pair Corralation between Spotify Technology and Natura Co
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.09 times more return on investment than Natura Co. However, Spotify Technology is 1.09 times more volatile than Natura Co Holding. It trades about 0.26 of its potential returns per unit of risk. Natura Co Holding is currently generating about 0.01 per unit of risk. If you would invest 47,700 in Spotify Technology SA on September 12, 2024 and sell it today you would earn a total of 22,501 from holding Spotify Technology SA or generate 47.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Spotify Technology SA vs. Natura Co Holding
Performance |
| Timeline |
| Spotify Technology |
| Natura Co Holding |
Spotify Technology and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Natura Co
The main advantage of trading using opposite Spotify Technology and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.| Spotify Technology vs. Pet Center Comrcio | Spotify Technology vs. Locaweb Servios de | Spotify Technology vs. Aeris Indstria e | Spotify Technology vs. Energisa SA |
| Natura Co vs. Verizon Communications | Natura Co vs. Palantir Technologies | Natura Co vs. Paycom Software | Natura Co vs. Unifique Telecomunicaes 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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