Correlation Between Natura Co and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both Natura Co and Localiza Rent 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 Localiza Rent 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 Localiza Rent a, you can compare the effects of market volatilities on Natura Co and Localiza Rent 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 Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Localiza Rent.
Diversification Opportunities for Natura Co and Localiza Rent
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Natura and Localiza is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Localiza Rent a in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent a 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 Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent a has no effect on the direction of Natura Co i.e., Natura Co and Localiza Rent go up and down completely randomly.
Pair Corralation between Natura Co and Localiza Rent
Assuming the 90 days trading horizon Natura Co Holding is expected to generate 0.97 times more return on investment than Localiza Rent. However, Natura Co Holding is 1.03 times less risky than Localiza Rent. It trades about 0.04 of its potential returns per unit of risk. Localiza Rent a is currently generating about -0.1 per unit of risk. If you would invest 1,364 in Natura Co Holding on September 10, 2024 and sell it today you would earn a total of 57.00 from holding Natura Co Holding or generate 4.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Natura Co Holding vs. Localiza Rent a
Performance |
Timeline |
Natura Co Holding |
Localiza Rent a |
Natura Co and Localiza Rent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natura Co and Localiza Rent
The main advantage of trading using opposite Natura Co and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent's long position.Natura Co vs. Charter Communications | Natura Co vs. Healthpeak Properties | Natura Co vs. salesforce inc | Natura Co vs. Brpr Corporate Offices |
Localiza Rent vs. Lojas Renner SA | Localiza Rent vs. Raia Drogasil SA | Localiza Rent vs. Equatorial Energia SA | Localiza Rent vs. CCR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
CEOs Directory Screen CEOs from public companies around the world |