Correlation Between Olin and Neo Performance
Can any of the company-specific risk be diversified away by investing in both Olin and Neo Performance 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 Olin and Neo Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and Neo Performance Materials, you can compare the effects of market volatilities on Olin and Neo Performance 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 Olin with a short position of Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Neo Performance.
Diversification Opportunities for Olin and Neo Performance
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Olin and Neo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials and Olin 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 Olin Corporation are associated (or correlated) with Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of Olin i.e., Olin and Neo Performance go up and down completely randomly.
Pair Corralation between Olin and Neo Performance
Considering the 90-day investment horizon Olin Corporation is expected to generate 1.8 times more return on investment than Neo Performance. However, Olin is 1.8 times more volatile than Neo Performance Materials. It trades about 0.07 of its potential returns per unit of risk. Neo Performance Materials is currently generating about -0.2 per unit of risk. If you would invest 3,313 in Olin Corporation on October 23, 2024 and sell it today you would earn a total of 64.00 from holding Olin Corporation or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olin Corp. vs. Neo Performance Materials
Performance |
| Timeline |
| Olin |
| Neo Performance Materials |
Olin and Neo Performance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and Neo Performance
The main advantage of trading using opposite Olin and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin position performs unexpectedly, Neo Performance 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 Neo Performance will offset losses from the drop in Neo Performance's long position.| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
| Neo Performance vs. Mativ Holdings | Neo Performance vs. Sensient Technologies | Neo Performance vs. Koppers Holdings | Neo Performance vs. Axalta Coating Systems |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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