Correlation Between Lsb Industries and Green Plains
Can any of the company-specific risk be diversified away by investing in both Lsb Industries 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 Lsb Industries and Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Green Plains Renewable, you can compare the effects of market volatilities on Lsb Industries 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 Lsb Industries with a short position of Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Green Plains.
Diversification Opportunities for Lsb Industries and Green Plains
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lsb and Green is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries 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 Lsb Industries 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 Lsb Industries 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 Lsb Industries i.e., Lsb Industries and Green Plains go up and down completely randomly.
Pair Corralation between Lsb Industries and Green Plains
Considering the 90-day investment horizon Lsb Industries is expected to generate 1.67 times more return on investment than Green Plains. However, Lsb Industries is 1.67 times more volatile than Green Plains Renewable. It trades about 0.19 of its potential returns per unit of risk. Green Plains Renewable is currently generating about 0.19 per unit of risk. If you would invest 760.00 in Lsb Industries on October 20, 2024 and sell it today you would earn a total of 147.00 from holding Lsb Industries or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsb Industries vs. Green Plains Renewable
Performance |
| Timeline |
| Lsb Industries |
| Green Plains Renewable |
Lsb Industries and Green Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsb Industries and Green Plains
The main advantage of trading using opposite Lsb Industries and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries 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.| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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