Correlation Between Gevo and Nano One
Can any of the company-specific risk be diversified away by investing in both Gevo and Nano One 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 Nano One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gevo Inc and Nano One Materials, you can compare the effects of market volatilities on Gevo and Nano One 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 Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gevo and Nano One.
Diversification Opportunities for Gevo and Nano One
Poor diversification
The 3 months correlation between Gevo and Nano is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gevo Inc and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Gevo i.e., Gevo and Nano One go up and down completely randomly.
Pair Corralation between Gevo and Nano One
Given the investment horizon of 90 days Gevo Inc is expected to generate 1.48 times more return on investment than Nano One. However, Gevo is 1.48 times more volatile than Nano One Materials. It trades about 0.04 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.06 per unit of risk. If you would invest 123.00 in Gevo Inc on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Gevo Inc or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gevo Inc vs. Nano One Materials
Performance |
| Timeline |
| Gevo Inc |
| Nano One Materials |
Gevo and Nano One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gevo and Nano One
The main advantage of trading using opposite Gevo and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gevo position performs unexpectedly, Nano One 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 Nano One will offset losses from the drop in Nano One's long position.| Gevo vs. REX American Resources | Gevo vs. Axalta Coating Systems | Gevo vs. Avantor | Gevo vs. FutureFuel Corp |
| Nano One vs. G6 Materials Corp | Nano One vs. Haydale Graphene Industries | Nano One vs. Orica Limited | Nano One vs. Johnson Matthey PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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