Correlation Between NEWELL RUBBERMAID and VITEC SOFTWARE

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

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

Diversification Opportunities for NEWELL RUBBERMAID and VITEC SOFTWARE

-0.01

Correlation Coefficient

NEWELL RUBBERMAID  VITEC SOFTWARE

Good diversification

The 3 months correlation between NEWELL and VITEC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID are associated (or correlated) with VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between NEWELL RUBBERMAID and VITEC SOFTWARE

Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.21 times less return on investment than VITEC SOFTWARE. In addition to that, NEWELL RUBBERMAID is 2.18 times more volatile than VITEC SOFTWARE GROUP. It trades about 0.17 of its total potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.46 per unit of volatility. If you would invest  3,919  in VITEC SOFTWARE GROUP on September 23, 2024 and sell it today you would earn a total of  661.00  from holding VITEC SOFTWARE GROUP or generate 16.87% return on investment over 90 days.

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

NEWELL RUBBERMAID   vs.  VITEC SOFTWARE GROUP

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.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VITEC SOFTWARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NEWELL RUBBERMAID and VITEC SOFTWARE

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

The idea behind NEWELL RUBBERMAID and VITEC SOFTWARE GROUP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.