Correlation Between Neogen and Viemed Healthcare
Can any of the company-specific risk be diversified away by investing in both Neogen and Viemed Healthcare 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 Viemed Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neogen and Viemed Healthcare, you can compare the effects of market volatilities on Neogen and Viemed Healthcare 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 Viemed Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen and Viemed Healthcare.
Diversification Opportunities for Neogen and Viemed Healthcare
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Neogen and Viemed is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Neogen i.e., Neogen and Viemed Healthcare go up and down completely randomly.
Pair Corralation between Neogen and Viemed Healthcare
Given the investment horizon of 90 days Neogen is expected to generate 1.4 times more return on investment than Viemed Healthcare. However, Neogen is 1.4 times more volatile than Viemed Healthcare. It trades about 0.03 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.09 per unit of risk. If you would invest 1,405 in Neogen on August 29, 2024 and sell it today you would earn a total of 12.00 from holding Neogen or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neogen vs. Viemed Healthcare
Performance |
| Timeline |
| Neogen |
| Viemed Healthcare |
Neogen and Viemed Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogen and Viemed Healthcare
The main advantage of trading using opposite Neogen and Viemed Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen position performs unexpectedly, Viemed Healthcare 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 Viemed Healthcare will offset losses from the drop in Viemed Healthcare's long position.The idea behind Neogen and Viemed Healthcare 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.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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