Correlation Between Medpace Holdings and Neogen

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Can any of the company-specific risk be diversified away by investing in both Medpace Holdings 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 Medpace Holdings and Neogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medpace Holdings and Neogen, you can compare the effects of market volatilities on Medpace Holdings 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 Medpace Holdings with a short position of Neogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medpace Holdings and Neogen.

Diversification Opportunities for Medpace Holdings and Neogen

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Medpace and Neogen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Medpace Holdings and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen and Medpace Holdings 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 Medpace Holdings 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 Medpace Holdings i.e., Medpace Holdings and Neogen go up and down completely randomly.

Pair Corralation between Medpace Holdings and Neogen

Given the investment horizon of 90 days Medpace Holdings is expected to generate 0.61 times more return on investment than Neogen. However, Medpace Holdings is 1.65 times less risky than Neogen. It trades about 0.01 of its potential returns per unit of risk. Neogen is currently generating about -0.01 per unit of risk. If you would invest  40,963  in Medpace Holdings on March 7, 2024 and sell it today you would lose (186.00) from holding Medpace Holdings or give up 0.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Medpace Holdings  vs.  Neogen

 Performance 
       Timeline  
Medpace Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Medpace Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Medpace Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Neogen 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Neogen is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Medpace Holdings and Neogen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medpace Holdings and Neogen

The main advantage of trading using opposite Medpace Holdings and Neogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medpace Holdings 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.
The idea behind Medpace Holdings and Neogen 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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