Correlation Between Newell Brands and Brown Forman

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Newell Brands and Brown Forman 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 Brown Forman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newell Brands and Brown Forman, you can compare the effects of market volatilities on Newell Brands and Brown Forman 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 Brown Forman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Brown Forman.

Diversification Opportunities for Newell Brands and Brown Forman

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Newell and Brown is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands Inc and Brown Forman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Forman 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 Brown Forman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Forman has no effect on the direction of Newell Brands i.e., Newell Brands and Brown Forman go up and down completely randomly.

Pair Corralation between Newell Brands and Brown Forman

Considering the 90-day investment horizon Newell Brands is expected to under-perform the Brown Forman. In addition to that, Newell Brands is 1.6 times more volatile than Brown Forman. It trades about -0.01 of its total potential returns per unit of risk. Brown Forman is currently generating about -0.01 per unit of volatility. If you would invest  7,600  in Brown Forman on June 30, 2022 and sell it today you would lose (850.00)  from holding Brown Forman or give up 11.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Newell Brands Inc  vs.  Brown Forman Inc

 Performance (%) 
       Timeline  
Newell Brands 
Newell Performance
0 of 100
Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Newell Price Channel

Brown Forman 
Brown Performance
0 of 100
Over the last 90 days Brown Forman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Brown Forman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Brown Price Channel

Newell Brands and Brown Forman Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newell Brands and Brown Forman

The main advantage of trading using opposite Newell Brands and Brown Forman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Brown Forman 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 Brown Forman will offset losses from the drop in Brown Forman's long position.
Newell Brands vs. Kibush Capital Corp
The idea behind Newell Brands and Brown Forman 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.
Brown Forman vs. Kibush Capital Corp
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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go