Correlation Between AdvanSix and Green Plains
Can any of the company-specific risk be diversified away by investing in both AdvanSix and Green Plains 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 AdvanSix and Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvanSix and Green Plains Renewable, you can compare the effects of market volatilities on AdvanSix and Green Plains 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 AdvanSix with a short position of Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Green Plains.
Diversification Opportunities for AdvanSix and Green Plains
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AdvanSix and Green is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Green Plains Renewable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Plains Renewable and AdvanSix 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 AdvanSix are associated (or correlated) with Green Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Plains Renewable has no effect on the direction of AdvanSix i.e., AdvanSix and Green Plains go up and down completely randomly.
Pair Corralation between AdvanSix and Green Plains
Given the investment horizon of 90 days AdvanSix is expected to generate 0.87 times more return on investment than Green Plains. However, AdvanSix is 1.15 times less risky than Green Plains. It trades about 0.22 of its potential returns per unit of risk. Green Plains Renewable is currently generating about 0.19 per unit of risk. If you would invest 2,827 in AdvanSix on October 20, 2024 and sell it today you would earn a total of 331.00 from holding AdvanSix or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvanSix vs. Green Plains Renewable
Performance |
| Timeline |
| AdvanSix |
| Green Plains Renewable |
AdvanSix and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvanSix and Green Plains
The main advantage of trading using opposite AdvanSix and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix position performs unexpectedly, Green Plains 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 Green Plains will offset losses from the drop in Green Plains' long position.| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
| Green Plains vs. Lsb Industries | Green Plains vs. AdvanSix | Green Plains vs. Tronox Holdings PLC | Green Plains vs. Methanex |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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