Correlation Between Chemours and American Vanguard

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

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

Diversification Opportunities for Chemours and American Vanguard

0.74

Correlation Coefficient

Chemours  American Vanguard

Poor diversification

The 3 months correlation between Chemours and American is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Chemours 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 Chemours Co are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of Chemours i.e., Chemours and American Vanguard go up and down completely randomly.

Pair Corralation between Chemours and American Vanguard

Allowing for the 90-day total investment horizon Chemours is expected to generate 1.43 times less return on investment than American Vanguard. But when comparing it to its historical volatility, Chemours Co is 1.01 times less risky than American Vanguard. It trades about 0.26 of its potential returns per unit of risk. American Vanguard is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  456.00  in American Vanguard on October 27, 2024 and sell it today you would earn a total of  105.00  from holding American Vanguard or generate 23.03% return on investment over 90 days.

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

Chemours Co  vs.  American Vanguard

Chemours

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours exhibited solid returns over the last few months and may actually be approaching a breakup point.

American Vanguard

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Vanguard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chemours and American Vanguard

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

The idea behind Chemours Co and American Vanguard 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..