Correlation Between Neo Performance and Innospec
Can any of the company-specific risk be diversified away by investing in both Neo Performance and Innospec 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 Innospec 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 Innospec, you can compare the effects of market volatilities on Neo Performance and Innospec 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 Innospec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Performance and Innospec.
Diversification Opportunities for Neo Performance and Innospec
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neo and Innospec is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Neo Performance Materials and Innospec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innospec 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 Innospec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innospec has no effect on the direction of Neo Performance i.e., Neo Performance and Innospec go up and down completely randomly.
Pair Corralation between Neo Performance and Innospec
Assuming the 90 days horizon Neo Performance Materials is expected to generate 1.23 times more return on investment than Innospec. However, Neo Performance is 1.23 times more volatile than Innospec. It trades about 0.06 of its potential returns per unit of risk. Innospec is currently generating about -0.02 per unit of risk. If you would invest 482.00 in Neo Performance Materials on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Neo Performance Materials or generate 17.84% 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. Innospec
Performance |
| Timeline |
| Neo Performance Materials |
| Innospec |
Neo Performance and Innospec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Performance and Innospec
The main advantage of trading using opposite Neo Performance and Innospec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Performance position performs unexpectedly, Innospec 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 Innospec will offset losses from the drop in Innospec's long position.| Neo Performance vs. Sherwin Williams Co | Neo Performance vs. Air Liquide SA | Neo Performance vs. LAir Liquide SA | Neo Performance vs. Air Products and |
| Innospec vs. Minerals Technologies | Innospec vs. Oil Dri | Innospec vs. Quaker Chemical | Innospec vs. Sensient 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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