Correlation Between American Vanguard and Yara International

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

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

Diversification Opportunities for American Vanguard and Yara International

-0.66

Correlation Coefficient

American Vanguard  Yara International

Excellent diversification

The 3 months correlation between American and Yara is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of American Vanguard i.e., American Vanguard and Yara International go up and down completely randomly.

Pair Corralation between American Vanguard and Yara International

Considering the 90-day investment horizon American Vanguard is expected to under-perform the Yara International. In addition to that, American Vanguard is 1.61 times more volatile than Yara International ASA. It trades about -0.06 of its total potential returns per unit of risk. Yara International ASA is currently generating about -0.06 per unit of volatility. If you would invest  4,010  in Yara International ASA on September 12, 2024 and sell it today you would lose (1,199) from holding Yara International ASA or give up 29.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	55.4%
Values	Daily Returns

American Vanguard  vs.  Yara International ASA

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Yara International ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yara International ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Yara International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Vanguard and Yara International

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

The idea behind American Vanguard and Yara International ASA 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.