Correlation Between NEWELL RUBBERMAID and EHEALTH

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

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

Diversification Opportunities for NEWELL RUBBERMAID and EHEALTH

0.53

Correlation Coefficient

NEWELL RUBBERMAID  EHEALTH

Very weak diversification

The 3 months correlation between NEWELL and EHEALTH is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and EHEALTH go up and down completely randomly.

Pair Corralation between NEWELL RUBBERMAID and EHEALTH

Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to under-perform the EHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, NEWELL RUBBERMAID is 1.02 times less risky than EHEALTH. The stock trades about -0.18 of its potential returns per unit of risk. The EHEALTH is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  811.00  in EHEALTH on December 30, 2024 and sell it today you would lose (177.00) from holding EHEALTH or give up 21.82% of portfolio value over 90 days.

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

NEWELL RUBBERMAID   vs.  EHEALTH

NEWELL RUBBERMAID

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEWELL RUBBERMAID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EHEALTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days EHEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NEWELL RUBBERMAID and EHEALTH

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

The idea behind NEWELL RUBBERMAID and EHEALTH 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.