Correlation Between AXWAY SOFTWARE and NEWELL RUBBERMAID

Can any of the company-specific risk be diversified away by investing in both AXWAY SOFTWARE 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 AXWAY SOFTWARE and NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXWAY SOFTWARE EO and NEWELL RUBBERMAID , you can compare the effects of market volatilities on AXWAY SOFTWARE 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 AXWAY SOFTWARE with a short position of NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXWAY SOFTWARE and NEWELL RUBBERMAID.

Diversification Opportunities for AXWAY SOFTWARE and NEWELL RUBBERMAID

0.39

Correlation Coefficient

AXWAY SOFTWARE  NEWELL RUBBERMAID

Weak diversification

The 3 months correlation between AXWAY and NEWELL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and AXWAY SOFTWARE 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 AXWAY SOFTWARE EO 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 AXWAY SOFTWARE i.e., AXWAY SOFTWARE and NEWELL RUBBERMAID go up and down completely randomly.

Pair Corralation between AXWAY SOFTWARE and NEWELL RUBBERMAID

Assuming the 90 days horizon AXWAY SOFTWARE EO is expected to under-perform the NEWELL RUBBERMAID. But the stock apears to be less risky and, when comparing its historical volatility, AXWAY SOFTWARE EO is 1.97 times less risky than NEWELL RUBBERMAID. The stock trades about -0.06 of its potential returns per unit of risk. The NEWELL RUBBERMAID is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  970.00  in NEWELL RUBBERMAID on October 8, 2024 and sell it today you would lose (5.00) from holding NEWELL RUBBERMAID or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AXWAY SOFTWARE EO  vs.  NEWELL RUBBERMAID

AXWAY SOFTWARE EO

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AXWAY SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NEWELL RUBBERMAID

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEWELL RUBBERMAID are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, NEWELL RUBBERMAID unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXWAY SOFTWARE and NEWELL RUBBERMAID

The main advantage of trading using opposite AXWAY SOFTWARE and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXWAY SOFTWARE 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 AXWAY SOFTWARE EO 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.