Correlation Between NEWELL RUBBERMAID and BHP Group
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and BHP Group 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 BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and BHP Group Limited, you can compare the effects of market volatilities on NEWELL RUBBERMAID and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and BHP Group.
Diversification Opportunities for NEWELL RUBBERMAID and BHP Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEWELL and BHP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and BHP Group go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and BHP Group
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 2.36 times more return on investment than BHP Group. However, NEWELL RUBBERMAID is 2.36 times more volatile than BHP Group Limited. It trades about 0.14 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.16 per unit of risk. If you would invest 864.00 in NEWELL RUBBERMAID on September 24, 2024 and sell it today you would earn a total of 83.00 from holding NEWELL RUBBERMAID or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. BHP Group Limited
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| BHP Group Limited |
NEWELL RUBBERMAID and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and BHP Group
The main advantage of trading using opposite NEWELL RUBBERMAID and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Microsoft |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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