Correlation Between GREEN PLAINS and NEW MILLENNIUM

Can any of the company-specific risk be diversified away by investing in both GREEN PLAINS and NEW MILLENNIUM 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 NEW MILLENNIUM 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 NEW MILLENNIUM IRON, you can compare the effects of market volatilities on GREEN PLAINS and NEW MILLENNIUM 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 NEW MILLENNIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREEN PLAINS and NEW MILLENNIUM.

Diversification Opportunities for GREEN PLAINS and NEW MILLENNIUM

0.03

Correlation Coefficient

GREEN PLAINS  NEW MILLENNIUM

Significant diversification

The 3 months correlation between GREEN and NEW is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GREEN PLAINS RENEW and NEW MILLENNIUM IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW MILLENNIUM IRON 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 NEW MILLENNIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW MILLENNIUM IRON has no effect on the direction of GREEN PLAINS i.e., GREEN PLAINS and NEW MILLENNIUM go up and down completely randomly.

Pair Corralation between GREEN PLAINS and NEW MILLENNIUM

Assuming the 90 days trading horizon GREEN PLAINS RENEW is expected to under-perform the NEW MILLENNIUM. But the stock apears to be less risky and, when comparing its historical volatility, GREEN PLAINS RENEW is 3.7 times less risky than NEW MILLENNIUM. The stock trades about -0.08 of its potential returns per unit of risk. The NEW MILLENNIUM IRON is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  201.00  in NEW MILLENNIUM IRON on October 24, 2024 and sell it today you would earn a total of  554.00  from holding NEW MILLENNIUM IRON or generate 275.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

GREEN PLAINS RENEW  vs.  NEW MILLENNIUM IRON

GREEN PLAINS RENEW

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, GREEN PLAINS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NEW MILLENNIUM IRON

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEW MILLENNIUM IRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NEW MILLENNIUM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GREEN PLAINS and NEW MILLENNIUM

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

The idea behind GREEN PLAINS RENEW and NEW MILLENNIUM IRON 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..