Correlation Between Newell Brands and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Newell Brands and Natural Alternatives 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 Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and Natural Alternatives International, you can compare the effects of market volatilities on Newell Brands and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Natural Alternatives.
Diversification Opportunities for Newell Brands and Natural Alternatives
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Newell and Natural is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Newell Brands i.e., Newell Brands and Natural Alternatives go up and down completely randomly.
Pair Corralation between Newell Brands and Natural Alternatives
Considering the 90-day investment horizon Newell Brands is expected to generate 1.76 times more return on investment than Natural Alternatives. However, Newell Brands is 1.76 times more volatile than Natural Alternatives International. It trades about 0.19 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.07 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newell Brands vs. Natural Alternatives Internati
Performance |
| Timeline |
| Newell Brands |
| Natural Alternatives |
Newell Brands and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newell Brands and Natural Alternatives
The main advantage of trading using opposite Newell Brands and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Associated British Foods |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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