Correlation Between NEWELL RUBBERMAID and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and IMPERIAL TOBACCO , you can compare the effects of market volatilities on NEWELL RUBBERMAID and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and IMPERIAL TOBACCO.
Diversification Opportunities for NEWELL RUBBERMAID and IMPERIAL TOBACCO
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NEWELL and IMPERIAL is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and IMPERIAL TOBACCO
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to under-perform the IMPERIAL TOBACCO. In addition to that, NEWELL RUBBERMAID is 3.09 times more volatile than IMPERIAL TOBACCO . It trades about 0.0 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.08 per unit of volatility. If you would invest 2,064 in IMPERIAL TOBACCO on September 3, 2024 and sell it today you would earn a total of 1,015 from holding IMPERIAL TOBACCO or generate 49.18% 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. IMPERIAL TOBACCO
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| IMPERIAL TOBACCO |
NEWELL RUBBERMAID and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and IMPERIAL TOBACCO
The main advantage of trading using opposite NEWELL RUBBERMAID and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| NEWELL RUBBERMAID vs. ANTA SPORTS PRODUCT | NEWELL RUBBERMAID vs. EIDESVIK OFFSHORE NK | NEWELL RUBBERMAID vs. SIEM OFFSHORE NEW | NEWELL RUBBERMAID vs. WT OFFSHORE |
| IMPERIAL TOBACCO vs. Gamma Communications plc | IMPERIAL TOBACCO vs. WisdomTree Investments | IMPERIAL TOBACCO vs. Strategic Investments AS | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |