Correlation Between EMBARK EDUCATION and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION 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 EMBARK EDUCATION and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and NEWELL RUBBERMAID , you can compare the effects of market volatilities on EMBARK EDUCATION 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 EMBARK EDUCATION with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and NEWELL RUBBERMAID.
Diversification Opportunities for EMBARK EDUCATION and NEWELL RUBBERMAID
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EMBARK and NEWELL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and EMBARK EDUCATION 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 EMBARK EDUCATION LTD 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 EMBARK EDUCATION i.e., EMBARK EDUCATION and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and NEWELL RUBBERMAID
Assuming the 90 days horizon EMBARK EDUCATION is expected to generate 12.29 times less return on investment than NEWELL RUBBERMAID. But when comparing it to its historical volatility, EMBARK EDUCATION LTD is 9.75 times less risky than NEWELL RUBBERMAID. It trades about 0.11 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 662.00 in NEWELL RUBBERMAID on October 18, 2024 and sell it today you would earn a total of 292.00 from holding NEWELL RUBBERMAID or generate 44.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.77% |
| Values | Daily Returns |
EMBARK EDUCATION LTD vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| EMBARK EDUCATION LTD |
| NEWELL RUBBERMAID |
EMBARK EDUCATION and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMBARK EDUCATION and NEWELL RUBBERMAID
The main advantage of trading using opposite EMBARK EDUCATION and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION 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.| EMBARK EDUCATION vs. Texas Roadhouse | EMBARK EDUCATION vs. BROADWIND ENRGY | EMBARK EDUCATION vs. Penn National Gaming | EMBARK EDUCATION vs. Scientific Games |
| NEWELL RUBBERMAID vs. EMBARK EDUCATION LTD | NEWELL RUBBERMAID vs. STORE ELECTRONIC | NEWELL RUBBERMAID vs. Perdoceo Education | NEWELL RUBBERMAID vs. Xinhua Winshare Publishing |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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