Correlation Between NEWELL RUBBERMAID and Penn National
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and Penn National 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 Penn National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and Penn National Gaming, you can compare the effects of market volatilities on NEWELL RUBBERMAID and Penn National 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 Penn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and Penn National.
Diversification Opportunities for NEWELL RUBBERMAID and Penn National
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEWELL and Penn is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Penn National Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penn National Gaming 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 Penn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penn National Gaming has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Penn National go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and Penn National
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to under-perform the Penn National. But the stock apears to be less risky and, when comparing its historical volatility, NEWELL RUBBERMAID is 2.1 times less risky than Penn National. The stock trades about -0.4 of its potential returns per unit of risk. The Penn National Gaming is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,871 in Penn National Gaming on October 11, 2024 and sell it today you would earn a total of 5.00 from holding Penn National Gaming or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. Penn National Gaming
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| Penn National Gaming |
NEWELL RUBBERMAID and Penn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and Penn National
The main advantage of trading using opposite NEWELL RUBBERMAID and Penn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, Penn National 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 Penn National will offset losses from the drop in Penn National's long position.| NEWELL RUBBERMAID vs. CLEAN ENERGY FUELS | NEWELL RUBBERMAID vs. GALENA MINING LTD | NEWELL RUBBERMAID vs. GWILLI FOOD | NEWELL RUBBERMAID vs. Austevoll Seafood ASA |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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