Correlation Between Grifols SA and NEWELL RUBBERMAID

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

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

Diversification Opportunities for Grifols SA and NEWELL RUBBERMAID

-0.57

Correlation Coefficient

Grifols SA  NEWELL RUBBERMAID

Excellent diversification

The 3 months correlation between Grifols and NEWELL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grifols SA and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID and Grifols SA 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 Grifols SA are associated (or correlated) with NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of Grifols SA i.e., Grifols SA and NEWELL RUBBERMAID go up and down completely randomly.

Pair Corralation between Grifols SA and NEWELL RUBBERMAID

Assuming the 90 days trading horizon Grifols SA is expected to under-perform the NEWELL RUBBERMAID. In addition to that, Grifols SA is 1.4 times more volatile than NEWELL RUBBERMAID . It trades about -0.17 of its total potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about 0.09 per unit of volatility. If you would invest  956.00  in NEWELL RUBBERMAID on October 24, 2024 and sell it today you would earn a total of  15.00  from holding NEWELL RUBBERMAID or generate 1.57% return on investment over 90 days.

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

Grifols SA  vs.  NEWELL RUBBERMAID

Grifols SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grifols SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NEWELL RUBBERMAID

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEWELL RUBBERMAID are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, NEWELL RUBBERMAID unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grifols SA and NEWELL RUBBERMAID

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

The idea behind Grifols SA and NEWELL RUBBERMAID 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 Transaction History module to view history of all your transactions and understand their impact on performance.