Correlation Between Aluminum and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both Aluminum 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 Aluminum and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and NEWELL RUBBERMAID , you can compare the effects of market volatilities on Aluminum 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 Aluminum with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum and NEWELL RUBBERMAID.
Diversification Opportunities for Aluminum and NEWELL RUBBERMAID
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aluminum and NEWELL is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and Aluminum 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 Aluminum of 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 Aluminum i.e., Aluminum and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between Aluminum and NEWELL RUBBERMAID
Assuming the 90 days horizon Aluminum of is expected to generate 0.98 times more return on investment than NEWELL RUBBERMAID. However, Aluminum of is 1.03 times less risky than NEWELL RUBBERMAID. It trades about 0.06 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.0 per unit of risk. If you would invest 31.00 in Aluminum of on October 28, 2024 and sell it today you would earn a total of 32.00 from holding Aluminum of or generate 103.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| Aluminum |
| NEWELL RUBBERMAID |
Aluminum and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminum and NEWELL RUBBERMAID
The main advantage of trading using opposite Aluminum and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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.| Aluminum vs. ARDAGH METAL PACDL 0001 | Aluminum vs. SERI INDUSTRIAL EO | Aluminum vs. LOANDEPOT INC A | Aluminum vs. Global Ship Lease |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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