Correlation Between DBS Group and NEWELL RUBBERMAID

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

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

Diversification Opportunities for DBS Group and NEWELL RUBBERMAID

0.89

Correlation Coefficient

DBS Group  NEWELL RUBBERMAID

Very poor diversification

The 3 months correlation between DBS and NEWELL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and NEWELL RUBBERMAID go up and down completely randomly.

Pair Corralation between DBS Group and NEWELL RUBBERMAID

Assuming the 90 days trading horizon DBS Group Holdings is expected to generate 0.6 times more return on investment than NEWELL RUBBERMAID. However, DBS Group Holdings is 1.68 times less risky than NEWELL RUBBERMAID. It trades about 0.23 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about -0.51 per unit of risk. If you would invest  3,090  in DBS Group Holdings on October 12, 2024 and sell it today you would earn a total of  119.00  from holding DBS Group Holdings or generate 3.85% return on investment over 90 days.

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

DBS Group Holdings  vs.  NEWELL RUBBERMAID

DBS Group Holdings

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

NEWELL RUBBERMAID

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEWELL RUBBERMAID are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, NEWELL RUBBERMAID unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DBS Group and NEWELL RUBBERMAID

The main advantage of trading using opposite DBS Group and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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 DBS Group Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.