Correlation Between Dow Jones and NEO PERFORMMAT
Can any of the company-specific risk be diversified away by investing in both Dow Jones and NEO PERFORMMAT 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 Dow Jones and NEO PERFORMMAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and NEO PERFORMMAT, you can compare the effects of market volatilities on Dow Jones and NEO PERFORMMAT 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 Dow Jones with a short position of NEO PERFORMMAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and NEO PERFORMMAT.
Diversification Opportunities for Dow Jones and NEO PERFORMMAT
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and NEO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of Dow Jones i.e., Dow Jones and NEO PERFORMMAT go up and down completely randomly.
Pair Corralation between Dow Jones and NEO PERFORMMAT
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.18 times less return on investment than NEO PERFORMMAT. But when comparing it to its historical volatility, Dow Jones Industrial is 3.41 times less risky than NEO PERFORMMAT. It trades about 0.06 of its potential returns per unit of risk. NEO PERFORMMAT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 511.00 in NEO PERFORMMAT on September 21, 2024 and sell it today you would earn a total of 10.00 from holding NEO PERFORMMAT or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.15% |
| Values | Daily Returns |
Dow Jones Industrial vs. NEO PERFORMMAT
Performance |
| Timeline |
Dow Jones and NEO PERFORMMAT Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
NEO PERFORMMAT
Pair trading matchups for NEO PERFORMMAT
Pair Trading with Dow Jones and NEO PERFORMMAT
The main advantage of trading using opposite Dow Jones and NEO PERFORMMAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, NEO PERFORMMAT 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 NEO PERFORMMAT will offset losses from the drop in NEO PERFORMMAT's long position.| Dow Jones vs. Kinsale Capital Group | Dow Jones vs. QBE Insurance Group | Dow Jones vs. ICC Holdings | Dow Jones vs. Weyco Group |
| NEO PERFORMMAT vs. Albemarle | NEO PERFORMMAT vs. Superior Plus Corp | NEO PERFORMMAT vs. SIVERS SEMICONDUCTORS AB | NEO PERFORMMAT vs. Norsk Hydro ASA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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