Correlation Between Plastic Omnium and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and NEWELL RUBBERMAID , you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and NEWELL RUBBERMAID.
Diversification Opportunities for Plastic Omnium and NEWELL RUBBERMAID
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plastic and NEWELL is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between Plastic Omnium and NEWELL RUBBERMAID
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the NEWELL RUBBERMAID. But the stock apears to be less risky and, when comparing its historical volatility, Plastic Omnium is 1.1 times less risky than NEWELL RUBBERMAID. The stock trades about -0.24 of its potential returns per unit of risk. The 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| Plastic Omnium |
| NEWELL RUBBERMAID |
Plastic Omnium and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and NEWELL RUBBERMAID
The main advantage of trading using opposite Plastic Omnium and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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