Correlation Between Newell Brands and International Consolidated

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

By analyzing existing cross correlation between Newell Brands and International Consolidated Airlines, you can compare the effects of market volatilities on Newell Brands and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and International Consolidated.

Diversification Opportunities for Newell Brands and International Consolidated

-0.31

Correlation Coefficient

Newell Brands  International Consolidated

Very good diversification

The 3 months correlation between Newell and International is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Newell Brands i.e., Newell Brands and International Consolidated go up and down completely randomly.

Pair Corralation between Newell Brands and International Consolidated

Considering the 90-day investment horizon Newell Brands is expected to under-perform the International Consolidated. In addition to that, Newell Brands is 1.72 times more volatile than International Consolidated Airlines. It trades about -0.16 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about -0.01 per unit of volatility. If you would invest  759.00  in International Consolidated Airlines on December 22, 2024 and sell it today you would lose (25.00) from holding International Consolidated Airlines or give up 3.29% of portfolio value over 90 days.

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

Newell Brands  vs.  International Consolidated Air

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.

International Consolidated

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Consolidated Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, International Consolidated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Newell Brands and International Consolidated

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

The idea behind Newell Brands and International Consolidated Airlines 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.