Correlation Between Neo Battery and Global X
Can any of the company-specific risk be diversified away by investing in both Neo Battery and Global X 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 Global X 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 Global X Active, you can compare the effects of market volatilities on Neo Battery and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Battery and Global X.
Diversification Opportunities for Neo Battery and Global X
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Neo and Global is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Active has no effect on the direction of Neo Battery i.e., Neo Battery and Global X go up and down completely randomly.
Pair Corralation between Neo Battery and Global X
Assuming the 90 days horizon Neo Battery Materials is expected to generate 11.76 times more return on investment than Global X. However, Neo Battery is 11.76 times more volatile than Global X Active. It trades about 0.08 of its potential returns per unit of risk. Global X Active is currently generating about 0.06 per unit of risk. If you would invest 19.00 in Neo Battery Materials on September 2, 2024 and sell it today you would earn a total of 69.00 from holding Neo Battery Materials or generate 363.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Neo Battery Materials vs. Global X Active
Performance |
| Timeline |
| Neo Battery Materials |
| Global X Active |
Neo Battery and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Battery and Global X
The main advantage of trading using opposite Neo Battery and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Battery position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind Neo Battery Materials and Global X Active 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.| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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