Correlation Between Newell Brands and Coty

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

By analyzing existing cross correlation between Newell Brands and Coty Inc, you can compare the effects of market volatilities on Newell Brands and Coty 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 Brands with a short position of Coty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Coty.

Diversification Opportunities for Newell Brands and Coty

0.95

Correlation Coefficient

Newell Brands  Coty

Almost no diversification

The 3 months correlation between Newell and Coty is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Newell Brands 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 Brands are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Newell Brands i.e., Newell Brands and Coty go up and down completely randomly.

Pair Corralation between Newell Brands and Coty

Considering the 90-day investment horizon Newell Brands is expected to under-perform the Coty. In addition to that, Newell Brands is 1.57 times more volatile than Coty Inc. It trades about -0.15 of its total potential returns per unit of risk. Coty Inc is currently generating about -0.13 per unit of volatility. If you would invest  692.00  in Coty Inc on December 28, 2024 and sell it today you would lose (137.00) from holding Coty Inc or give up 19.8% of portfolio value over 90 days.

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

Newell Brands  vs.  Coty Inc

Newell Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Coty Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coty Inc 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Newell Brands and Coty

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

The idea behind Newell Brands and Coty Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.