Correlation Between Quaker Chemical and Neo Performance
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical and Neo Performance 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 Quaker Chemical and Neo Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Neo Performance Materials, you can compare the effects of market volatilities on Quaker Chemical and Neo Performance 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 Quaker Chemical with a short position of Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Neo Performance.
Diversification Opportunities for Quaker Chemical and Neo Performance
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Quaker and Neo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials and Quaker Chemical 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 Quaker Chemical are associated (or correlated) with Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of Quaker Chemical i.e., Quaker Chemical and Neo Performance go up and down completely randomly.
Pair Corralation between Quaker Chemical and Neo Performance
Considering the 90-day investment horizon Quaker Chemical is expected to generate 2.06 times more return on investment than Neo Performance. However, Quaker Chemical is 2.06 times more volatile than Neo Performance Materials. It trades about 0.04 of its potential returns per unit of risk. Neo Performance Materials is currently generating about -0.09 per unit of risk. If you would invest 15,450 in Quaker Chemical on August 29, 2024 and sell it today you would earn a total of 330.00 from holding Quaker Chemical or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Neo Performance Materials
Performance |
| Timeline |
| Quaker Chemical |
| Neo Performance Materials |
Quaker Chemical and Neo Performance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Neo Performance
The main advantage of trading using opposite Quaker Chemical and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical position performs unexpectedly, Neo Performance 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 Performance will offset losses from the drop in Neo Performance's long position.| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
| Neo Performance vs. Akzo Nobel NV | Neo Performance vs. Avoca LLC | Neo Performance vs. Arkema SA ADR | Neo Performance vs. HUMANA INC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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