Correlation Between Haier Smart and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both Haier Smart and NEWELL RUBBERMAID 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 Haier Smart and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and NEWELL RUBBERMAID , you can compare the effects of market volatilities on Haier Smart and NEWELL RUBBERMAID 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 Haier Smart with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and NEWELL RUBBERMAID.
Diversification Opportunities for Haier Smart and NEWELL RUBBERMAID
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Haier and NEWELL is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and Haier Smart 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 Haier Smart Home are associated (or correlated) with NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of Haier Smart i.e., Haier Smart and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between Haier Smart and NEWELL RUBBERMAID
Assuming the 90 days trading horizon Haier Smart Home is expected to generate 0.54 times more return on investment than NEWELL RUBBERMAID. However, Haier Smart Home is 1.85 times less risky than NEWELL RUBBERMAID. It trades about 0.07 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.01 per unit of risk. If you would invest 96.00 in Haier Smart Home on September 20, 2024 and sell it today you would earn a total of 79.00 from holding Haier Smart Home or generate 82.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| Haier Smart Home |
| NEWELL RUBBERMAID |
Haier Smart and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and NEWELL RUBBERMAID
The main advantage of trading using opposite Haier Smart and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID's long position.| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
| NEWELL RUBBERMAID vs. Granite Construction | NEWELL RUBBERMAID vs. Sterling Construction | NEWELL RUBBERMAID vs. Titan Machinery | NEWELL RUBBERMAID vs. Cardinal Health |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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