Correlation Between Verde Clean and Newell Brands

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

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

Diversification Opportunities for Verde Clean and Newell Brands

0.0

Correlation Coefficient

Verde Clean  Newell Brands

Pay attention - limited upside

The 3 months correlation between Verde and Newell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands and Verde Clean 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 Verde Clean Fuels 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 Verde Clean i.e., Verde Clean and Newell Brands go up and down completely randomly.

Pair Corralation between Verde Clean and Newell Brands

Assuming the 90 days horizon Verde Clean Fuels is expected to generate 7.92 times more return on investment than Newell Brands. However, Verde Clean is 7.92 times more volatile than Newell Brands. It trades about 0.15 of its potential returns per unit of risk. Newell Brands is currently generating about -0.36 per unit of risk. If you would invest  22.00  in Verde Clean Fuels on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Verde Clean Fuels or generate 22.73% return on investment over 90 days.

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

Verde Clean Fuels  vs.  Newell Brands

Verde Clean Fuels

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Verde Clean showed solid returns over the last few months and may actually be approaching a breakup point.

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 Verde Clean and Newell Brands

The main advantage of trading using opposite Verde Clean and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verde Clean 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 Verde Clean Fuels 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.