Correlation Between Natures Miracle and Newell Brands

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

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

Diversification Opportunities for Natures Miracle and Newell Brands

-0.76

Correlation Coefficient

Natures Miracle  Newell Brands

Pay attention - limited upside

The 3 months correlation between Natures and Newell is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Natures Miracle Holding and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and Natures Miracle 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 Natures Miracle Holding 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 Natures Miracle i.e., Natures Miracle and Newell Brands go up and down completely randomly.

Pair Corralation between Natures Miracle and Newell Brands

Given the investment horizon of 90 days Natures Miracle Holding is expected to under-perform the Newell Brands. In addition to that, Natures Miracle is 7.34 times more volatile than Newell Brands. It trades about -0.1 of its total potential returns per unit of risk. Newell Brands is currently generating about 0.08 per unit of volatility. If you would invest  946.00  in Newell Brands on October 26, 2024 and sell it today you would earn a total of  95.00  from holding Newell Brands or generate 10.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.61%
Values	Daily Returns

Natures Miracle Holding  vs.  Newell Brands

Natures Miracle Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Miracle Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Newell Brands

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newell Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Newell Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Natures Miracle and Newell Brands

The main advantage of trading using opposite Natures Miracle and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Miracle 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 Natures Miracle Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.