Correlation Between Natura Co and Spectrum Brands

Can any of the company-specific risk be diversified away by investing in both Natura Co and Spectrum Brands 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 Spectrum Brands 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 Spectrum Brands Holdings, you can compare the effects of market volatilities on Natura Co and Spectrum Brands 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 Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura Co and Spectrum Brands.

Diversification Opportunities for Natura Co and Spectrum Brands

0.0

Correlation Coefficient

Natura Co  Spectrum Brands

Pay attention - limited upside

The 3 months correlation between Natura and Spectrum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings 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 Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Natura Co i.e., Natura Co and Spectrum Brands go up and down completely randomly.

Pair Corralation between Natura Co and Spectrum Brands

If you would invest (100.00) in Natura Co Holding on January 5, 2025 and sell it today you would earn a total of  100.00  from holding Natura Co Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Natura Co Holding  vs.  Spectrum Brands Holdings

Natura Co Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natura Co Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Natura Co is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Spectrum Brands Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Natura Co and Spectrum Brands

The main advantage of trading using opposite Natura Co and Spectrum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura Co position performs unexpectedly, Spectrum Brands 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 Spectrum Brands will offset losses from the drop in Spectrum Brands' long position.

The idea behind Natura Co Holding and Spectrum Brands Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.