Correlation Between Financial and Neo Battery
Can any of the company-specific risk be diversified away by investing in both Financial and Neo Battery 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 Financial and Neo Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Neo Battery Materials, you can compare the effects of market volatilities on Financial and Neo Battery 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 Financial with a short position of Neo Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Neo Battery.
Diversification Opportunities for Financial and Neo Battery
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Neo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Neo Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Battery Materials and Financial 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 Financial 15 Split are associated (or correlated) with Neo Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Battery Materials has no effect on the direction of Financial i.e., Financial and Neo Battery go up and down completely randomly.
Pair Corralation between Financial and Neo Battery
Assuming the 90 days trading horizon Financial is expected to generate 31.78 times less return on investment than Neo Battery. But when comparing it to its historical volatility, Financial 15 Split is 23.53 times less risky than Neo Battery. It trades about 0.33 of its potential returns per unit of risk. Neo Battery Materials is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Neo Battery Materials on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Neo Battery Materials or generate 112.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Neo Battery Materials
Performance |
| Timeline |
| Financial 15 Split |
| Neo Battery Materials |
Financial and Neo Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Neo Battery
The main advantage of trading using opposite Financial and Neo Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial position performs unexpectedly, Neo Battery 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 Battery will offset losses from the drop in Neo Battery's long position.| Financial vs. iShares Canadian HYBrid | Financial vs. Brompton European Dividend | Financial vs. Solar Alliance Energy | Financial vs. PHN Multi Style All Cap |
| Neo Battery vs. Solar Alliance Energy | Neo Battery vs. Global X Active | Neo Battery vs. Financial 15 Split | Neo Battery vs. Rubicon Organics |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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