Correlation Between NEO and REN

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NEO and REN 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 REN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEO and REN, you can compare the effects of market volatilities on NEO and REN 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 REN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEO and REN.

Diversification Opportunities for NEO and REN

0.94
  Correlation Coefficient
 NEO
 REN

Almost no diversification

The 3 months correlation between NEO and REN is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NEO and REN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REN 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 REN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REN has no effect on the direction of NEO i.e., NEO and REN go up and down completely randomly.

Pair Corralation between NEO and REN

Assuming the 90 days trading horizon NEO is expected to generate 1.45 times less return on investment than REN. But when comparing it to its historical volatility, NEO is 1.58 times less risky than REN. It trades about 0.14 of its potential returns per unit of risk. REN is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8.36  in REN on December 29, 2023 and sell it today you would earn a total of  1.64  from holding REN or generate 19.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

NEO  vs.  REN

 Performance 
       Timeline  
NEO 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NEO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEO exhibited solid returns over the last few months and may actually be approaching a breakup point.
REN 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in REN are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, REN exhibited solid returns over the last few months and may actually be approaching a breakup point.

NEO and REN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEO and REN

The main advantage of trading using opposite NEO and REN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEO position performs unexpectedly, REN 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 REN will offset losses from the drop in REN's long position.
The idea behind NEO and REN 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
CEOs Directory
Screen CEOs from public companies around the world
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world