Correlation Between 654106AH6 and Newell Brands

Can any of the company-specific risk be diversified away by investing in both 654106AH6 and Newell Brands 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 654106AH6 and Newell Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NIKE INC and Newell Brands, you can compare the effects of market volatilities on 654106AH6 and Newell Brands 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 654106AH6 with a short position of Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of 654106AH6 and Newell Brands.

Diversification Opportunities for 654106AH6 and Newell Brands

-0.27

Correlation Coefficient

654106AH6  Newell Brands

Very good diversification

The 3 months correlation between 654106AH6 and Newell is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NIKE INC and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and 654106AH6 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 NIKE INC are associated (or correlated) with Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of 654106AH6 i.e., 654106AH6 and Newell Brands go up and down completely randomly.

Pair Corralation between 654106AH6 and Newell Brands

Assuming the 90 days trading horizon NIKE INC is expected to under-perform the Newell Brands. But the bond apears to be less risky and, when comparing its historical volatility, NIKE INC is 4.15 times less risky than Newell Brands. The bond trades about -0.21 of its potential returns per unit of risk. The Newell Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  993.00  in Newell Brands on October 6, 2024 and sell it today you would earn a total of  6.00  from holding Newell Brands or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

NIKE INC  vs.  Newell Brands

654106AH6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 654106AH6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Newell Brands

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newell Brands are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Newell Brands disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 654106AH6 and Newell Brands

The main advantage of trading using opposite 654106AH6 and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 654106AH6 position performs unexpectedly, Newell Brands 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 Brands will offset losses from the drop in Newell Brands' long position.

The idea behind NIKE INC and Newell Brands 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .