Correlation Between NEWELL RUBBERMAID and Computershare

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

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

Diversification Opportunities for NEWELL RUBBERMAID and Computershare

0.85

Correlation Coefficient

NEWELL RUBBERMAID  Computershare

Very poor diversification

The 3 months correlation between NEWELL and Computershare is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Computershare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare Limited 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 Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare Limited has no effect on the direction of NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Computershare go up and down completely randomly.

Pair Corralation between NEWELL RUBBERMAID and Computershare

Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 2.33 times more return on investment than Computershare. However, NEWELL RUBBERMAID is 2.33 times more volatile than Computershare Limited. It trades about 0.21 of its potential returns per unit of risk. Computershare Limited is currently generating about 0.17 per unit of risk. If you would invest  652.00  in NEWELL RUBBERMAID on September 12, 2024 and sell it today you would earn a total of  426.00  from holding NEWELL RUBBERMAID or generate 65.34% return on investment over 90 days.

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

NEWELL RUBBERMAID   vs.  Computershare Limited

NEWELL RUBBERMAID

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NEWELL RUBBERMAID are ranked lower than 16 (%) 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.

Computershare Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Computershare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEWELL RUBBERMAID and Computershare

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

The idea behind NEWELL RUBBERMAID and Computershare Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.