Correlation Between Small Cap and Neogen
Can any of the company-specific risk be diversified away by investing in both Small Cap and Neogen 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 Small Cap and Neogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and Neogen, you can compare the effects of market volatilities on Small Cap and Neogen 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 Small Cap with a short position of Neogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Neogen.
Diversification Opportunities for Small Cap and Neogen
Excellent diversification
The 3 months correlation between Small and Neogen is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen and Small Cap 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 Small Cap Premium are associated (or correlated) with Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Small Cap i.e., Small Cap and Neogen go up and down completely randomly.
Pair Corralation between Small Cap and Neogen
Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.18 times more return on investment than Neogen. However, Small Cap Premium is 5.61 times less risky than Neogen. It trades about 0.05 of its potential returns per unit of risk. Neogen is currently generating about -0.06 per unit of risk. If you would invest 2,407 in Small Cap Premium on August 31, 2024 and sell it today you would earn a total of 39.00 from holding Small Cap Premium or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Premium vs. Neogen
Performance |
| Timeline |
| Small Cap Premium |
| Neogen |
Small Cap and Neogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Neogen
The main advantage of trading using opposite Small Cap and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Neogen 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 Neogen will offset losses from the drop in Neogen's long position.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
| Neogen vs. Qiagen NV | Neogen vs. Aclaris Therapeutics | Neogen vs. IQVIA Holdings | Neogen vs. Medpace Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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