Correlation Between Apple and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and NEWELL RUBBERMAID , you can compare the effects of market volatilities on Apple 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 Apple with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and NEWELL RUBBERMAID.
Diversification Opportunities for Apple and NEWELL RUBBERMAID
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and NEWELL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and Apple 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 Apple Inc 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 Apple i.e., Apple and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between Apple and NEWELL RUBBERMAID
Assuming the 90 days trading horizon Apple is expected to generate 2.58 times less return on investment than NEWELL RUBBERMAID. But when comparing it to its historical volatility, Apple Inc is 1.86 times less risky than NEWELL RUBBERMAID. It trades about 0.14 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 820.00 in NEWELL RUBBERMAID on August 29, 2024 and sell it today you would earn a total of 92.00 from holding NEWELL RUBBERMAID or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| Apple Inc |
| NEWELL RUBBERMAID |
Apple and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and NEWELL RUBBERMAID
The main advantage of trading using opposite Apple and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Treasury Wine Estates | Apple vs. Daito Trust Construction | Apple vs. Granite Construction | Apple vs. TITAN MACHINERY |
| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Microsoft | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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