Correlation Between Flameret and Green Plains
Can any of the company-specific risk be diversified away by investing in both Flameret 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 Flameret and Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flameret and Green Plains Renewable, you can compare the effects of market volatilities on Flameret 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 Flameret with a short position of Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flameret and Green Plains.
Diversification Opportunities for Flameret and Green Plains
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flameret and Green is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Flameret 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 Flameret 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 Flameret 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 Flameret i.e., Flameret and Green Plains go up and down completely randomly.
Pair Corralation between Flameret and Green Plains
Given the investment horizon of 90 days Flameret is expected to under-perform the Green Plains. In addition to that, Flameret is 3.6 times more volatile than Green Plains Renewable. It trades about -0.12 of its total potential returns per unit of risk. Green Plains Renewable is currently generating about -0.15 per unit of volatility. If you would invest 1,223 in Green Plains Renewable on September 1, 2024 and sell it today you would lose (143.00) from holding Green Plains Renewable or give up 11.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flameret vs. Green Plains Renewable
Performance |
| Timeline |
| Flameret |
| Green Plains Renewable |
Flameret and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flameret and Green Plains
The main advantage of trading using opposite Flameret and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flameret 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.| Flameret vs. Intl Star | Flameret vs. Global Develpmts | Flameret vs. Buyer Group International | Flameret vs. Gold And Gemstone |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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