Correlation Between Newell Brands and Bruush Oral

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

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

Diversification Opportunities for Newell Brands and Bruush Oral

0.48

Correlation Coefficient

Newell Brands  Bruush Oral

Very weak diversification

The 3 months correlation between Newell and Bruush is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Bruush Oral Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruush Oral Care 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 Bruush Oral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruush Oral Care has no effect on the direction of Newell Brands i.e., Newell Brands and Bruush Oral go up and down completely randomly.

Pair Corralation between Newell Brands and Bruush Oral

Considering the 90-day investment horizon Newell Brands is expected to generate 0.23 times more return on investment than Bruush Oral. However, Newell Brands is 4.26 times less risky than Bruush Oral. It trades about -0.05 of its potential returns per unit of risk. Bruush Oral Care is currently generating about -0.07 per unit of risk. If you would invest  2,064  in Newell Brands on February 3, 2024 and sell it today you would lose (1,296) from holding Newell Brands or give up 62.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.09%
Values	Daily Returns

Newell Brands  vs.  Bruush Oral Care

Newell Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Newell Brands is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bruush Oral Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bruush Oral Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Newell Brands and Bruush Oral

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

The idea behind Newell Brands and Bruush Oral Care 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.