Correlation Between Diageo PLC and N2OFF

Can any of the company-specific risk be diversified away by investing in both Diageo PLC and N2OFF 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 Diageo PLC and N2OFF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diageo PLC ADR and N2OFF Inc, you can compare the effects of market volatilities on Diageo PLC and N2OFF 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 Diageo PLC with a short position of N2OFF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and N2OFF.

Diversification Opportunities for Diageo PLC and N2OFF

0.16

Correlation Coefficient

Diageo PLC  N2OFF

Average diversification

The 3 months correlation between Diageo and N2OFF is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR and N2OFF Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N2OFF Inc and Diageo PLC 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 Diageo PLC ADR are associated (or correlated) with N2OFF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N2OFF Inc has no effect on the direction of Diageo PLC i.e., Diageo PLC and N2OFF go up and down completely randomly.

Pair Corralation between Diageo PLC and N2OFF

Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the N2OFF. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 26.01 times less risky than N2OFF. The stock trades about -0.13 of its potential returns per unit of risk. The N2OFF Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  26.00  in N2OFF Inc on December 25, 2024 and sell it today you would earn a total of  1.00  from holding N2OFF Inc or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Diageo PLC ADR  vs.  N2OFF Inc

Diageo PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

N2OFF Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in N2OFF Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, N2OFF displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diageo PLC and N2OFF

The main advantage of trading using opposite Diageo PLC and N2OFF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC position performs unexpectedly, N2OFF 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 N2OFF will offset losses from the drop in N2OFF's long position.

The idea behind Diageo PLC ADR and N2OFF Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.