Correlation Between American Vanguard and Ecovyst

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

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

Diversification Opportunities for American Vanguard and Ecovyst

0.38

Correlation Coefficient

American Vanguard  Ecovyst

Weak diversification

The 3 months correlation between American and Ecovyst is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of American Vanguard i.e., American Vanguard and Ecovyst go up and down completely randomly.

Pair Corralation between American Vanguard and Ecovyst

Considering the 90-day investment horizon American Vanguard is expected to under-perform the Ecovyst. In addition to that, American Vanguard is 1.45 times more volatile than Ecovyst. It trades about -0.07 of its total potential returns per unit of risk. Ecovyst is currently generating about -0.01 per unit of volatility. If you would invest  1,022  in Ecovyst on October 11, 2024 and sell it today you would lose (280.00) from holding Ecovyst or give up 27.4% of portfolio value over 90 days.

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

American Vanguard  vs.  Ecovyst

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 rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ecovyst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Vanguard and Ecovyst

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

The idea behind American Vanguard and Ecovyst 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.