Correlation Between Gevo and Oil Dri

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

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

Diversification Opportunities for Gevo and Oil Dri

-0.26

Correlation Coefficient

Gevo  Oil Dri

Very good diversification

The 3 months correlation between Gevo and Oil is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gevo Inc and Oil Dri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Dri and Gevo 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 Gevo Inc are associated (or correlated) with Oil Dri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Dri has no effect on the direction of Gevo i.e., Gevo and Oil Dri go up and down completely randomly.

Pair Corralation between Gevo and Oil Dri

Given the investment horizon of 90 days Gevo Inc is expected to under-perform the Oil Dri. In addition to that, Gevo is 2.12 times more volatile than Oil Dri. It trades about -0.18 of its total potential returns per unit of risk. Oil Dri is currently generating about 0.16 per unit of volatility. If you would invest  6,975  in Oil Dri on September 25, 2024 and sell it today you would earn a total of  1,622  from holding Oil Dri or generate 23.25% return on investment over 90 days.

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

Gevo Inc  vs.  Oil Dri

Gevo Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gevo Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Gevo displayed solid returns over the last few months and may actually be approaching a breakup point.

Oil Dri

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Dri are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Oil Dri exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gevo and Oil Dri

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

The idea behind Gevo Inc and Oil Dri 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.