Correlation Between American Vanguard and Safety Shot
Can any of the company-specific risk be diversified away by investing in both American Vanguard and Safety Shot 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 American Vanguard and Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Vanguard and Safety Shot, you can compare the effects of market volatilities on American Vanguard and Safety Shot 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 American Vanguard with a short position of Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Vanguard and Safety Shot.
Diversification Opportunities for American Vanguard and Safety Shot
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Safety is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot and American Vanguard 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 American Vanguard are associated (or correlated) with Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of American Vanguard i.e., American Vanguard and Safety Shot go up and down completely randomly.
Pair Corralation between American Vanguard and Safety Shot
Considering the 90-day investment horizon American Vanguard is expected to under-perform the Safety Shot. But the stock apears to be less risky and, when comparing its historical volatility, American Vanguard is 2.14 times less risky than Safety Shot. The stock trades about -0.07 of its potential returns per unit of risk. The Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Safety Shot on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Safety Shot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Vanguard vs. Safety Shot
Performance |
| Timeline |
| American Vanguard |
| Safety Shot |
American Vanguard and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Vanguard and Safety Shot
The main advantage of trading using opposite American Vanguard and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Vanguard position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| American Vanguard vs. CF Industries Holdings | American Vanguard vs. The Mosaic | American Vanguard vs. CVR Partners LP | American Vanguard vs. ICL Israel Chemicals |
| Safety Shot vs. Grupo Simec SAB | Safety Shot vs. Ironveld Plc | Safety Shot vs. MACOM Technology Solutions | Safety Shot vs. Gfl Environmental Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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