Correlation Between APPLIED MATERIALS and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and NEWELL RUBBERMAID , you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and NEWELL RUBBERMAID.
Diversification Opportunities for APPLIED MATERIALS and NEWELL RUBBERMAID
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APPLIED and NEWELL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and NEWELL RUBBERMAID
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the NEWELL RUBBERMAID. In addition to that, APPLIED MATERIALS is 1.07 times more volatile than NEWELL RUBBERMAID . It trades about -0.06 of its total potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.13 per unit of volatility. If you would invest 820.00 in NEWELL RUBBERMAID on August 27, 2024 and sell it today you would earn a total of 51.00 from holding NEWELL RUBBERMAID or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| APPLIED MATERIALS |
| NEWELL RUBBERMAID |
APPLIED MATERIALS and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and NEWELL RUBBERMAID
The main advantage of trading using opposite APPLIED MATERIALS and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Microsoft |
| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Microsoft |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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