Correlation Between Newell Brands and Virgin Group
Can any of the company-specific risk be diversified away by investing in both Newell Brands and Virgin Group 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 Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and Virgin Group Acquisition, you can compare the effects of market volatilities on Newell Brands and Virgin Group 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 Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Virgin Group.
Diversification Opportunities for Newell Brands and Virgin Group
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Newell and Virgin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition 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 Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Newell Brands i.e., Newell Brands and Virgin Group go up and down completely randomly.
Pair Corralation between Newell Brands and Virgin Group
Considering the 90-day investment horizon Newell Brands is expected to generate 1.35 times more return on investment than Virgin Group. However, Newell Brands is 1.35 times more volatile than Virgin Group Acquisition. It trades about 0.19 of its potential returns per unit of risk. Virgin Group Acquisition is currently generating about 0.0 per unit of risk. If you would invest 732.00 in Newell Brands on August 24, 2024 and sell it today you would earn a total of 162.00 from holding Newell Brands or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newell Brands vs. Virgin Group Acquisition
Performance |
| Timeline |
| Newell Brands |
| Virgin Group Acquisition |
Newell Brands and Virgin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newell Brands and Virgin Group
The main advantage of trading using opposite Newell Brands and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Virgin Group 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 Virgin Group will offset losses from the drop in Virgin Group's long position.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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