Correlation Between American Vanguard and E I

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

By analyzing existing cross correlation between American Vanguard and E I du, you can compare the effects of market volatilities on American Vanguard and E I 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 American Vanguard with a short position of E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Vanguard and E I.

Diversification Opportunities for American Vanguard and E I

0.1

Correlation Coefficient

American Vanguard  E I

Average diversification

The 3 months correlation between American and CTA-PA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du and American Vanguard 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 American Vanguard are associated (or correlated) with E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of American Vanguard i.e., American Vanguard and E I go up and down completely randomly.

Pair Corralation between American Vanguard and E I

Considering the 90-day investment horizon American Vanguard is expected to under-perform the E I. In addition to that, American Vanguard is 1.45 times more volatile than E I du. It trades about -0.07 of its total potential returns per unit of risk. E I du is currently generating about 0.01 per unit of volatility. If you would invest  5,798  in E I du on October 9, 2024 and sell it today you would lose (248.00) from holding E I du or give up 4.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

American Vanguard  vs.  E I du

American Vanguard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Vanguard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

E I du

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E I du has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with American Vanguard and E I

The main advantage of trading using opposite American Vanguard and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Vanguard position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.

The idea behind American Vanguard and E I du 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.