Correlation Between AdvanSix and Green Plains

Can any of the company-specific risk be diversified away by investing in both AdvanSix 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 AdvanSix and Green Plains into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdvanSix and Green Plains Renewable, you can compare the effects of market volatilities on AdvanSix 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 AdvanSix with a short position of Green Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Green Plains.

Diversification Opportunities for AdvanSix and Green Plains

0.63

Correlation Coefficient

AdvanSix  Green Plains

Poor diversification

The 3 months correlation between AdvanSix and Green is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix 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 AdvanSix 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 AdvanSix 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 AdvanSix i.e., AdvanSix and Green Plains go up and down completely randomly.

Pair Corralation between AdvanSix and Green Plains

Given the investment horizon of 90 days AdvanSix is expected to generate 0.47 times more return on investment than Green Plains. However, AdvanSix is 2.14 times less risky than Green Plains. It trades about -0.14 of its potential returns per unit of risk. Green Plains Renewable is currently generating about -0.17 per unit of risk. If you would invest  2,783  in AdvanSix on December 29, 2024 and sell it today you would lose (526.00) from holding AdvanSix or give up 18.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AdvanSix  vs.  Green Plains Renewable

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Green Plains Renewable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Plains Renewable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AdvanSix and Green Plains

The main advantage of trading using opposite AdvanSix and Green Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix 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.

The idea behind AdvanSix and Green Plains Renewable pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.