Correlation Between Newell Brands and Hafnia
Can any of the company-specific risk be diversified away by investing in both Newell Brands and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and Hafnia Limited, you can compare the effects of market volatilities on Newell Brands and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Hafnia.
Diversification Opportunities for Newell Brands and Hafnia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Newell and Hafnia is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Newell Brands i.e., Newell Brands and Hafnia go up and down completely randomly.
Pair Corralation between Newell Brands and Hafnia
Considering the 90-day investment horizon Newell Brands is expected to generate 0.55 times more return on investment than Hafnia. However, Newell Brands is 1.81 times less risky than Hafnia. It trades about 0.0 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.1 per unit of risk. If you would invest 998.00 in Newell Brands on November 3, 2024 and sell it today you would lose (2.00) from holding Newell Brands or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newell Brands vs. Hafnia Limited
Performance |
| Timeline |
| Newell Brands |
| Hafnia Limited |
Newell Brands and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newell Brands and Hafnia
The main advantage of trading using opposite Newell Brands and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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