Correlation Between NEWELL RUBBERMAID and Columbia Sportswear

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Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID and Columbia Sportswear 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 Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and Columbia Sportswear, you can compare the effects of market volatilities on NEWELL RUBBERMAID and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and Columbia Sportswear.

Diversification Opportunities for NEWELL RUBBERMAID and Columbia Sportswear

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between NEWELL and Columbia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Columbia Sportswear go up and down completely randomly.

Pair Corralation between NEWELL RUBBERMAID and Columbia Sportswear

Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 2.21 times more return on investment than Columbia Sportswear. However, NEWELL RUBBERMAID is 2.21 times more volatile than Columbia Sportswear. It trades about 0.04 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.03 per unit of risk. If you would invest  745.00  in NEWELL RUBBERMAID on October 5, 2024 and sell it today you would earn a total of  210.00  from holding NEWELL RUBBERMAID or generate 28.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

NEWELL RUBBERMAID   vs.  Columbia Sportswear

 Performance 
       Timeline  
NEWELL RUBBERMAID 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days NEWELL RUBBERMAID has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
Columbia Sportswear 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Columbia Sportswear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Columbia Sportswear may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NEWELL RUBBERMAID and Columbia Sportswear Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEWELL RUBBERMAID and Columbia Sportswear

The main advantage of trading using opposite NEWELL RUBBERMAID and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.
The idea behind NEWELL RUBBERMAID and Columbia Sportswear 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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