Correlation Between Newell Brands and Clorox
Can any of the company-specific risk be diversified away by investing in both Newell Brands and Clorox 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 Brands and Clorox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and The Clorox, you can compare the effects of market volatilities on Newell Brands and Clorox 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 Brands with a short position of Clorox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Clorox.
Diversification Opportunities for Newell Brands and Clorox
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Newell and Clorox is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and The Clorox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clorox and Newell Brands 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 Brands are associated (or correlated) with Clorox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clorox has no effect on the direction of Newell Brands i.e., Newell Brands and Clorox go up and down completely randomly.
Pair Corralation between Newell Brands and Clorox
Considering the 90-day investment horizon Newell Brands is expected to generate 1.13 times more return on investment than Clorox. However, Newell Brands is 1.13 times more volatile than The Clorox. It trades about 0.09 of its potential returns per unit of risk. The Clorox is currently generating about -0.1 per unit of risk. If you would invest 991.00 in Newell Brands on October 20, 2024 and sell it today you would earn a total of 21.00 from holding Newell Brands or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newell Brands vs. The Clorox
Performance |
| Timeline |
| Newell Brands |
| Clorox |
Newell Brands and Clorox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newell Brands and Clorox
The main advantage of trading using opposite Newell Brands and Clorox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Clorox 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 Clorox will offset losses from the drop in Clorox's long position.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
| Clorox vs. Colgate Palmolive | Clorox vs. Procter Gamble | Clorox vs. Unilever PLC ADR | Clorox vs. Church Dwight |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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