Correlation Between NEWELL RUBBERMAID and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and CHINA EDUCATION 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 CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on NEWELL RUBBERMAID and CHINA EDUCATION 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 CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and CHINA EDUCATION.
Diversification Opportunities for NEWELL RUBBERMAID and CHINA EDUCATION
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEWELL and CHINA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION 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 CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and CHINA EDUCATION
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.45 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, NEWELL RUBBERMAID is 1.24 times less risky than CHINA EDUCATION. It trades about 0.04 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 31.00 in CHINA EDUCATION GROUP on September 12, 2024 and sell it today you would earn a total of 13.00 from holding CHINA EDUCATION GROUP or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| CHINA EDUCATION GROUP |
NEWELL RUBBERMAID and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and CHINA EDUCATION
The main advantage of trading using opposite NEWELL RUBBERMAID and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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