Correlation Between NEWELL RUBBERMAID and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and LIFENET INSURANCE 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 LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and LIFENET INSURANCE CO, you can compare the effects of market volatilities on NEWELL RUBBERMAID and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and LIFENET INSURANCE.
Diversification Opportunities for NEWELL RUBBERMAID and LIFENET INSURANCE
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEWELL and LIFENET is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and LIFENET INSURANCE
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.16 times more return on investment than LIFENET INSURANCE. However, NEWELL RUBBERMAID is 1.16 times more volatile than LIFENET INSURANCE CO. It trades about 0.07 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.05 per unit of risk. If you would invest 873.00 in NEWELL RUBBERMAID on August 30, 2024 and sell it today you would earn a total of 28.00 from holding NEWELL RUBBERMAID or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| LIFENET INSURANCE |
NEWELL RUBBERMAID and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and LIFENET INSURANCE
The main advantage of trading using opposite NEWELL RUBBERMAID and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| NEWELL RUBBERMAID vs. PACIFIC ONLINE | NEWELL RUBBERMAID vs. Titan Machinery | NEWELL RUBBERMAID vs. Penta Ocean Construction Co | NEWELL RUBBERMAID vs. Salesforce |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Lyxor 1 |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |