Correlation Between NeoPharm and Dow Jones
Can any of the company-specific risk be diversified away by investing in both NeoPharm and Dow Jones 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 NeoPharm and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NeoPharm LTD and Dow Jones Industrial, you can compare the effects of market volatilities on NeoPharm and Dow Jones 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 NeoPharm with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of NeoPharm and Dow Jones.
Diversification Opportunities for NeoPharm and Dow Jones
Good diversification
The 3 months correlation between NeoPharm and Dow is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NeoPharm LTD and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and NeoPharm 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 NeoPharm LTD are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of NeoPharm i.e., NeoPharm and Dow Jones go up and down completely randomly.
Pair Corralation between NeoPharm and Dow Jones
Assuming the 90 days trading horizon NeoPharm LTD is expected to under-perform the Dow Jones. In addition to that, NeoPharm is 4.72 times more volatile than Dow Jones Industrial. It trades about -0.12 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.01 per unit of volatility. If you would invest 4,338,960 in Dow Jones Industrial on September 19, 2024 and sell it today you would earn a total of 6,030 from holding Dow Jones Industrial or generate 0.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
NeoPharm LTD vs. Dow Jones Industrial
Performance |
Timeline |
NeoPharm and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
NeoPharm LTD
Pair trading matchups for NeoPharm
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with NeoPharm and Dow Jones
The main advantage of trading using opposite NeoPharm and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeoPharm position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.NeoPharm vs. MegaStudyEdu Co | NeoPharm vs. DongKook Pharmaceutical Co | NeoPharm vs. COWELL FASHION CoLtd | NeoPharm vs. MegaStudy Co |
Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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