Correlation Between Green Plains and AdvanSix
Can any of the company-specific risk be diversified away by investing in both Green Plains and AdvanSix 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 Green Plains and AdvanSix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Plains Renewable and AdvanSix, you can compare the effects of market volatilities on Green Plains and AdvanSix 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 Green Plains with a short position of AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Plains and AdvanSix.
Diversification Opportunities for Green Plains and AdvanSix
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Green and AdvanSix is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Green Plains Renewable and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and Green Plains 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 Green Plains Renewable are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Green Plains i.e., Green Plains and AdvanSix go up and down completely randomly.
Pair Corralation between Green Plains and AdvanSix
Given the investment horizon of 90 days Green Plains is expected to generate 1.01 times less return on investment than AdvanSix. In addition to that, Green Plains is 1.15 times more volatile than AdvanSix. It trades about 0.19 of its total potential returns per unit of risk. AdvanSix is currently generating about 0.22 per unit of volatility. 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 |
Green Plains Renewable vs. AdvanSix
Performance |
| Timeline |
| Green Plains Renewable |
| AdvanSix |
Green Plains and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Plains and AdvanSix
The main advantage of trading using opposite Green Plains and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Plains position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| Green Plains vs. Lsb Industries | Green Plains vs. AdvanSix | Green Plains vs. Tronox Holdings PLC | Green Plains vs. Methanex |
| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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