Correlation Between NEWELL RUBBERMAID and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and Algonquin Power 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 NEWELL RUBBERMAID and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and Algonquin Power Utilities, you can compare the effects of market volatilities on NEWELL RUBBERMAID and Algonquin Power 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 NEWELL RUBBERMAID with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and Algonquin Power.
Diversification Opportunities for NEWELL RUBBERMAID and Algonquin Power
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NEWELL and Algonquin is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Algonquin Power go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and Algonquin Power
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.93 times more return on investment than Algonquin Power. However, NEWELL RUBBERMAID is 1.93 times more volatile than Algonquin Power Utilities. It trades about 0.01 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.12 per unit of risk. If you would invest 970.00 in NEWELL RUBBERMAID on October 10, 2024 and sell it today you would lose (4.00) from holding NEWELL RUBBERMAID or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. Algonquin Power Utilities
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| Algonquin Power Utilities |
NEWELL RUBBERMAID and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and Algonquin Power
The main advantage of trading using opposite NEWELL RUBBERMAID and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| NEWELL RUBBERMAID vs. Playtech plc | NEWELL RUBBERMAID vs. The Home Depot | NEWELL RUBBERMAID vs. 24SEVENOFFICE GROUP AB | NEWELL RUBBERMAID vs. KENEDIX OFFICE INV |
| Algonquin Power vs. SOGECLAIR SA INH | Algonquin Power vs. INDOFOOD AGRI RES | Algonquin Power vs. GWILLI FOOD | Algonquin Power vs. SEALED AIR |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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