Correlation Between Hospital Mater and Newell Brands

Can any of the company-specific risk be diversified away by investing in both Hospital Mater and Newell Brands 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 Hospital Mater and Newell Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hospital Mater Dei and Newell Brands, you can compare the effects of market volatilities on Hospital Mater and Newell Brands 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 Hospital Mater with a short position of Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hospital Mater and Newell Brands.

Diversification Opportunities for Hospital Mater and Newell Brands

-0.7

Correlation Coefficient

Hospital Mater  Newell Brands

Excellent diversification

The 3 months correlation between Hospital and Newell is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hospital Mater Dei and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and Hospital Mater 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 Hospital Mater Dei are associated (or correlated) with Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of Hospital Mater i.e., Hospital Mater and Newell Brands go up and down completely randomly.

Pair Corralation between Hospital Mater and Newell Brands

Assuming the 90 days trading horizon Hospital Mater Dei is expected to under-perform the Newell Brands. But the stock apears to be less risky and, when comparing its historical volatility, Hospital Mater Dei is 1.3 times less risky than Newell Brands. The stock trades about -0.07 of its potential returns per unit of risk. The Newell Brands is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,918  in Newell Brands on October 25, 2024 and sell it today you would earn a total of  1,114  from holding Newell Brands or generate 22.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Hospital Mater Dei  vs.  Newell Brands

Hospital Mater Dei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hospital Mater Dei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Newell Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newell Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Newell Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hospital Mater and Newell Brands

The main advantage of trading using opposite Hospital Mater and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hospital Mater position performs unexpectedly, Newell Brands 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 Brands will offset losses from the drop in Newell Brands' long position.

The idea behind Hospital Mater Dei and Newell Brands 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.