Correlation Between NEO and Algorand
Can any of the company-specific risk be diversified away by investing in both NEO and Algorand 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 and Algorand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEO and Algorand, you can compare the effects of market volatilities on NEO and Algorand 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 with a short position of Algorand. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEO and Algorand.
Diversification Opportunities for NEO and Algorand
Poor diversification
The 3 months correlation between NEO and Algorand is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NEO and Algorand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algorand and NEO 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 are associated (or correlated) with Algorand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algorand has no effect on the direction of NEO i.e., NEO and Algorand go up and down completely randomly.
Pair Corralation between NEO and Algorand
Assuming the 90 days trading horizon NEO is expected to generate 1.51 times more return on investment than Algorand. However, NEO is 1.51 times more volatile than Algorand. It trades about 0.11 of its potential returns per unit of risk. Algorand is currently generating about -0.26 per unit of risk. If you would invest 1,473 in NEO on January 19, 2024 and sell it today you would earn a total of 237.00 from holding NEO or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEO vs. Algorand
Performance |
| Timeline |
| NEO |
| Algorand |
NEO and Algorand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEO and Algorand
The main advantage of trading using opposite NEO and Algorand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEO position performs unexpectedly, Algorand 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 Algorand will offset losses from the drop in Algorand's long position.The idea behind NEO and Algorand pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |