Correlation Between Newell Brands and SP 500
Can any of the company-specific risk be diversified away by investing in both Newell Brands and SP 500 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 SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and SP 500 Financials, you can compare the effects of market volatilities on Newell Brands and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and SP 500.
Diversification Opportunities for Newell Brands and SP 500
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Newell and SPSY is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and SP 500 Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 Financials 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 SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 Financials has no effect on the direction of Newell Brands i.e., Newell Brands and SP 500 go up and down completely randomly.
Pair Corralation between Newell Brands and SP 500
Considering the 90-day investment horizon Newell Brands is expected to generate 4.75 times more return on investment than SP 500. However, Newell Brands is 4.75 times more volatile than SP 500 Financials. It trades about 0.05 of its potential returns per unit of risk. SP 500 Financials is currently generating about 0.14 per unit of risk. If you would invest 729.00 in Newell Brands on September 1, 2024 and sell it today you would earn a total of 230.00 from holding Newell Brands or generate 31.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.95% |
| Values | Daily Returns |
Newell Brands vs. SP 500 Financials
Performance |
| Timeline |
Newell Brands and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Newell Brands
Pair trading matchups for Newell Brands
SP 500 Financials
Pair trading matchups for SP 500
Pair Trading with Newell Brands and SP 500
The main advantage of trading using opposite Newell Brands and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
| SP 500 vs. Artisan Partners Asset | SP 500 vs. Inflection Point Acquisition | SP 500 vs. Analog Devices | SP 500 vs. Citizens Bancorp Investment |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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