Correlation Between TOTAL GABON and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and NEWELL RUBBERMAID 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 TOTAL GABON and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and NEWELL RUBBERMAID , you can compare the effects of market volatilities on TOTAL GABON and NEWELL RUBBERMAID 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 TOTAL GABON with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and NEWELL RUBBERMAID.
Diversification Opportunities for TOTAL GABON and NEWELL RUBBERMAID
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TOTAL and NEWELL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between TOTAL GABON and NEWELL RUBBERMAID
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.17 times less return on investment than NEWELL RUBBERMAID. But when comparing it to its historical volatility, TOTAL GABON is 2.31 times less risky than NEWELL RUBBERMAID. It trades about 0.08 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 745.00 in NEWELL RUBBERMAID on September 4, 2024 and sell it today you would earn a total of 178.00 from holding NEWELL RUBBERMAID or generate 23.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| TOTAL GABON |
| NEWELL RUBBERMAID |
TOTAL GABON and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and NEWELL RUBBERMAID
The main advantage of trading using opposite TOTAL GABON and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID's long position.The idea behind TOTAL GABON and NEWELL RUBBERMAID pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NEWELL RUBBERMAID vs. TOTAL GABON | NEWELL RUBBERMAID vs. Walgreens Boots Alliance | NEWELL RUBBERMAID vs. Peak Resources Limited |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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