Correlation Between NEWELL RUBBERMAID and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and LEGACY IRON 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 LEGACY IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and LEGACY IRON ORE, you can compare the effects of market volatilities on NEWELL RUBBERMAID and LEGACY IRON 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 LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and LEGACY IRON.
Diversification Opportunities for NEWELL RUBBERMAID and LEGACY IRON
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NEWELL and LEGACY is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE 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 LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and LEGACY IRON go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and LEGACY IRON
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 3.28 times more return on investment than LEGACY IRON. However, NEWELL RUBBERMAID is 3.28 times more volatile than LEGACY IRON ORE. It trades about 0.17 of its potential returns per unit of risk. LEGACY IRON ORE is currently generating about -0.13 per unit of risk. If you would invest 630.00 in NEWELL RUBBERMAID on August 29, 2024 and sell it today you would earn a total of 282.00 from holding NEWELL RUBBERMAID or generate 44.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. LEGACY IRON ORE
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| LEGACY IRON ORE |
NEWELL RUBBERMAID and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and LEGACY IRON
The main advantage of trading using opposite NEWELL RUBBERMAID and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Microsoft | NEWELL RUBBERMAID vs. Microsoft |
| LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Microsoft | LEGACY IRON 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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