Correlation Between Gevo and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Gevo and Quaker Chemical 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 Gevo and Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gevo Inc and Quaker Chemical, you can compare the effects of market volatilities on Gevo and Quaker Chemical 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 Gevo with a short position of Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gevo and Quaker Chemical.
Diversification Opportunities for Gevo and Quaker Chemical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gevo and Quaker is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gevo Inc and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical and Gevo 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 Gevo Inc are associated (or correlated) with Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Gevo i.e., Gevo and Quaker Chemical go up and down completely randomly.
Pair Corralation between Gevo and Quaker Chemical
Given the investment horizon of 90 days Gevo Inc is expected to generate 3.59 times more return on investment than Quaker Chemical. However, Gevo is 3.59 times more volatile than Quaker Chemical. It trades about 0.05 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 115.00 in Gevo Inc on August 27, 2024 and sell it today you would earn a total of 44.00 from holding Gevo Inc or generate 38.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gevo Inc vs. Quaker Chemical
Performance |
| Timeline |
| Gevo Inc |
| Quaker Chemical |
Gevo and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gevo and Quaker Chemical
The main advantage of trading using opposite Gevo and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gevo position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Gevo vs. REX American Resources | Gevo vs. Axalta Coating Systems | Gevo vs. Avantor | Gevo vs. FutureFuel Corp |
| Quaker Chemical vs. Minerals Technologies | Quaker Chemical vs. Innospec | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Cabot |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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