Correlation Between NEWELL RUBBERMAID and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and ALGOMA STEEL 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 ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on NEWELL RUBBERMAID and ALGOMA STEEL 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 ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and ALGOMA STEEL.
Diversification Opportunities for NEWELL RUBBERMAID and ALGOMA STEEL
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEWELL and ALGOMA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP 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 ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and ALGOMA STEEL
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.71 times more return on investment than ALGOMA STEEL. However, NEWELL RUBBERMAID is 1.71 times more volatile than ALGOMA STEEL GROUP. It trades about 0.04 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about 0.06 per unit of risk. If you would invest 717.00 in NEWELL RUBBERMAID on August 29, 2024 and sell it today you would earn a total of 195.00 from holding NEWELL RUBBERMAID or generate 27.2% 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. ALGOMA STEEL GROUP
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| ALGOMA STEEL GROUP |
NEWELL RUBBERMAID and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and ALGOMA STEEL
The main advantage of trading using opposite NEWELL RUBBERMAID and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Microsoft | NEWELL RUBBERMAID vs. Microsoft |
| ALGOMA STEEL vs. PLAY2CHILL SA ZY | ALGOMA STEEL vs. GREENX METALS LTD | ALGOMA STEEL vs. Harmony Gold Mining | ALGOMA STEEL vs. GRIFFIN MINING LTD |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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