Correlation Between ARISTOCRAT LEISURE and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and NEWELL RUBBERMAID , you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and NEWELL RUBBERMAID.
Diversification Opportunities for ARISTOCRAT LEISURE and NEWELL RUBBERMAID
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and NEWELL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and NEWELL RUBBERMAID
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.32 times more return on investment than NEWELL RUBBERMAID. However, ARISTOCRAT LEISURE is 3.1 times less risky than NEWELL RUBBERMAID. It trades about 0.32 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.09 per unit of risk. If you would invest 2,930 in ARISTOCRAT LEISURE on November 3, 2024 and sell it today you would earn a total of 1,570 from holding ARISTOCRAT LEISURE or generate 53.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| NEWELL RUBBERMAID |
ARISTOCRAT LEISURE and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and NEWELL RUBBERMAID
The main advantage of trading using opposite ARISTOCRAT LEISURE and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. APPLIED MATERIALS | ARISTOCRAT LEISURE vs. Materialise NV | ARISTOCRAT LEISURE vs. Heidelberg Materials AG | ARISTOCRAT LEISURE vs. SEI INVESTMENTS |
| NEWELL RUBBERMAID vs. Yuexiu Transport Infrastructure | NEWELL RUBBERMAID vs. JD SPORTS FASH | NEWELL RUBBERMAID vs. DICKER DATA LTD | NEWELL RUBBERMAID vs. Cass Information Systems |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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