Correlation Between NEWELL RUBBERMAID and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and Fortescue Metals 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 Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and Fortescue Metals Group, you can compare the effects of market volatilities on NEWELL RUBBERMAID and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and Fortescue Metals.
Diversification Opportunities for NEWELL RUBBERMAID and Fortescue Metals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NEWELL and Fortescue is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Fortescue Metals go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and Fortescue Metals
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.49 times more return on investment than Fortescue Metals. However, NEWELL RUBBERMAID is 1.49 times more volatile than Fortescue Metals Group. It trades about 0.1 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.05 per unit of risk. If you would invest 659.00 in NEWELL RUBBERMAID on November 7, 2024 and sell it today you would earn a total of 266.00 from holding NEWELL RUBBERMAID or generate 40.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. Fortescue Metals Group
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| Fortescue Metals |
NEWELL RUBBERMAID and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and Fortescue Metals
The main advantage of trading using opposite NEWELL RUBBERMAID and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| NEWELL RUBBERMAID vs. INTER CARS SA | NEWELL RUBBERMAID vs. Aegean Airlines SA | NEWELL RUBBERMAID vs. Commercial Vehicle Group | NEWELL RUBBERMAID vs. United Airlines Holdings |
| Fortescue Metals vs. SPARTAN STORES | Fortescue Metals vs. THAI BEVERAGE | Fortescue Metals vs. Tsingtao Brewery | Fortescue Metals vs. Fast Retailing Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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