Correlation Between Neogen and Balchem
Can any of the company-specific risk be diversified away by investing in both Neogen and Balchem 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 Neogen and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neogen and Balchem, you can compare the effects of market volatilities on Neogen and Balchem 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 Neogen with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen and Balchem.
Diversification Opportunities for Neogen and Balchem
Weak diversification
The 3 months correlation between Neogen and Balchem is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Neogen 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 Neogen are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Neogen i.e., Neogen and Balchem go up and down completely randomly.
Pair Corralation between Neogen and Balchem
Given the investment horizon of 90 days Neogen is expected to generate 4.73 times less return on investment than Balchem. In addition to that, Neogen is 1.71 times more volatile than Balchem. It trades about 0.01 of its total potential returns per unit of risk. Balchem is currently generating about 0.05 per unit of volatility. If you would invest 13,169 in Balchem on August 29, 2024 and sell it today you would earn a total of 5,063 from holding Balchem or generate 38.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neogen vs. Balchem
Performance |
| Timeline |
| Neogen |
| Balchem |
Neogen and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogen and Balchem
The main advantage of trading using opposite Neogen and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Neogen vs. Qiagen NV | Neogen vs. Aclaris Therapeutics | Neogen vs. IQVIA Holdings | Neogen vs. Medpace Holdings |
| Balchem vs. Direxion Daily FTSE | Balchem vs. Collegium Pharmaceutical | Balchem vs. KKR Co LP | Balchem vs. iShares Dividend and |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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