Correlation Between Virgin Group and Newell Brands
Can any of the company-specific risk be diversified away by investing in both Virgin Group and Newell Brands 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 Virgin Group and Newell Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Group Acquisition and Newell Brands, you can compare the effects of market volatilities on Virgin Group and Newell Brands 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 Virgin Group with a short position of Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Group and Newell Brands.
Diversification Opportunities for Virgin Group and Newell Brands
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Virgin and Newell is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and Virgin Group 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 Virgin Group Acquisition are associated (or correlated) with Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Virgin Group i.e., Virgin Group and Newell Brands go up and down completely randomly.
Pair Corralation between Virgin Group and Newell Brands
Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 1.88 times more return on investment than Newell Brands. However, Virgin Group is 1.88 times more volatile than Newell Brands. It trades about 0.04 of its potential returns per unit of risk. Newell Brands is currently generating about 0.03 per unit of risk. If you would invest 134.00 in Virgin Group Acquisition on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Virgin Group Acquisition or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Group Acquisition vs. Newell Brands
Performance |
| Timeline |
| Virgin Group Acquisition |
| Newell Brands |
Virgin Group and Newell Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Group and Newell Brands
The main advantage of trading using opposite Virgin Group and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Group position performs unexpectedly, Newell Brands 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 Brands will offset losses from the drop in Newell Brands' long position.| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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