Correlation Between GREEN PLAINS and TRAVEL +

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

By analyzing existing cross correlation between GREEN PLAINS RENEW and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on GREEN PLAINS and TRAVEL + 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 GREEN PLAINS with a short position of TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREEN PLAINS and TRAVEL +.

Diversification Opportunities for GREEN PLAINS and TRAVEL +

-0.12

Correlation Coefficient

GREEN PLAINS  TRAVEL +

Good diversification

The 3 months correlation between GREEN and TRAVEL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding GREEN PLAINS RENEW and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL and GREEN PLAINS 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 GREEN PLAINS RENEW are associated (or correlated) with TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of GREEN PLAINS i.e., GREEN PLAINS and TRAVEL + go up and down completely randomly.

Pair Corralation between GREEN PLAINS and TRAVEL +

Assuming the 90 days trading horizon GREEN PLAINS RENEW is expected to under-perform the TRAVEL +. In addition to that, GREEN PLAINS is 2.66 times more volatile than TRAVEL LEISURE DL 01. It trades about -0.18 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.1 per unit of volatility. If you would invest  4,842  in TRAVEL LEISURE DL 01 on December 20, 2024 and sell it today you would lose (542.00) from holding TRAVEL LEISURE DL 01 or give up 11.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

GREEN PLAINS RENEW  vs.  TRAVEL LEISURE DL 01

GREEN PLAINS RENEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days GREEN PLAINS RENEW 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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAVEL LEISURE DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GREEN PLAINS and TRAVEL +

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

The idea behind GREEN PLAINS RENEW and TRAVEL LEISURE DL 01 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.