Correlation Between Neo Battery and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Neo Battery and Dow Jones 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 Neo Battery and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Battery Materials and Dow Jones Industrial, you can compare the effects of market volatilities on Neo Battery and Dow Jones 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 Neo Battery with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Battery and Dow Jones.
Diversification Opportunities for Neo Battery and Dow Jones
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Neo and Dow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Neo Battery 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 Neo Battery Materials are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Neo Battery i.e., Neo Battery and Dow Jones go up and down completely randomly.
Pair Corralation between Neo Battery and Dow Jones
Assuming the 90 days horizon Neo Battery Materials is expected to generate 11.4 times more return on investment than Dow Jones. However, Neo Battery is 11.4 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 36.00 in Neo Battery Materials on August 31, 2024 and sell it today you would earn a total of 52.00 from holding Neo Battery Materials or generate 144.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Neo Battery Materials vs. Dow Jones Industrial
Performance |
| Timeline |
Neo Battery and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Neo Battery Materials
Pair trading matchups for Neo Battery
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Neo Battery and Dow Jones
The main advantage of trading using opposite Neo Battery and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Battery position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Neo Battery vs. Solar Alliance Energy | Neo Battery vs. Global X Active | Neo Battery vs. Financial 15 Split | Neo Battery vs. Rubicon Organics |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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