Correlation Between Neo Performance and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Neo Performance and Element Solutions 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 Performance and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Performance Materials and Element Solutions, you can compare the effects of market volatilities on Neo Performance and Element Solutions 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 Performance with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Performance and Element Solutions.
Diversification Opportunities for Neo Performance and Element Solutions
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neo and Element is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Neo Performance Materials and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and Neo Performance 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 Performance Materials are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Neo Performance i.e., Neo Performance and Element Solutions go up and down completely randomly.
Pair Corralation between Neo Performance and Element Solutions
Assuming the 90 days horizon Neo Performance Materials is expected to under-perform the Element Solutions. In addition to that, Neo Performance is 1.03 times more volatile than Element Solutions. It trades about -0.09 of its total potential returns per unit of risk. Element Solutions is currently generating about 0.2 per unit of volatility. If you would invest 2,667 in Element Solutions on August 29, 2024 and sell it today you would earn a total of 198.00 from holding Element Solutions or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neo Performance Materials vs. Element Solutions
Performance |
| Timeline |
| Neo Performance Materials |
| Element Solutions |
Neo Performance and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Performance and Element Solutions
The main advantage of trading using opposite Neo Performance and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Performance position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Neo Performance vs. Akzo Nobel NV | Neo Performance vs. Avoca LLC | Neo Performance vs. Arkema SA ADR | Neo Performance vs. HUMANA INC |
| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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