Correlation Between Nano One and Gevo
Can any of the company-specific risk be diversified away by investing in both Nano One and Gevo 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 Nano One and Gevo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nano One Materials and Gevo Inc, you can compare the effects of market volatilities on Nano One and Gevo 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 Nano One with a short position of Gevo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano One and Gevo.
Diversification Opportunities for Nano One and Gevo
Poor diversification
The 3 months correlation between Nano and Gevo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nano One Materials and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc and Nano One 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 Nano One Materials are associated (or correlated) with Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Nano One i.e., Nano One and Gevo go up and down completely randomly.
Pair Corralation between Nano One and Gevo
Assuming the 90 days horizon Nano One Materials is expected to generate 0.34 times more return on investment than Gevo. However, Nano One Materials is 2.98 times less risky than Gevo. It trades about -0.46 of its potential returns per unit of risk. Gevo Inc is currently generating about -0.21 per unit of risk. If you would invest 76.00 in Nano One Materials on August 30, 2024 and sell it today you would lose (21.00) from holding Nano One Materials or give up 27.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nano One Materials vs. Gevo Inc
Performance |
| Timeline |
| Nano One Materials |
| Gevo Inc |
Nano One and Gevo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nano One and Gevo
The main advantage of trading using opposite Nano One and Gevo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano One position performs unexpectedly, Gevo 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 Gevo will offset losses from the drop in Gevo's long position.| Nano One vs. G6 Materials Corp | Nano One vs. Haydale Graphene Industries | Nano One vs. Orica Limited | Nano One vs. Johnson Matthey PLC |
| Gevo vs. REX American Resources | Gevo vs. Axalta Coating Systems | Gevo vs. Avantor | Gevo vs. FutureFuel Corp |
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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