Correlation Between NEWELL RUBBERMAID and AmerisourceBergen

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

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

Diversification Opportunities for NEWELL RUBBERMAID and AmerisourceBergen

0.57

Correlation Coefficient

NEWELL RUBBERMAID  AmerisourceBergen

Very weak diversification

The 3 months correlation between NEWELL and AmerisourceBergen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and AmerisourceBergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmerisourceBergen 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 AmerisourceBergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmerisourceBergen has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and AmerisourceBergen go up and down completely randomly.

Pair Corralation between NEWELL RUBBERMAID and AmerisourceBergen

Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 20.18 times less return on investment than AmerisourceBergen. In addition to that, NEWELL RUBBERMAID is 2.65 times more volatile than AmerisourceBergen. It trades about 0.0 of its total potential returns per unit of risk. AmerisourceBergen is currently generating about 0.07 per unit of volatility. If you would invest  14,601  in AmerisourceBergen on October 11, 2024 and sell it today you would earn a total of  7,169  from holding AmerisourceBergen or generate 49.1% return on investment over 90 days.

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

NEWELL RUBBERMAID   vs.  AmerisourceBergen

NEWELL RUBBERMAID

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEWELL RUBBERMAID are ranked lower than 13 (%) 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.

AmerisourceBergen

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with NEWELL RUBBERMAID and AmerisourceBergen

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

The idea behind NEWELL RUBBERMAID and AmerisourceBergen 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.