Correlation Between Green Plains and SMLP Old

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

By analyzing existing cross correlation between Green Plains Partners and SMLP Old, you can compare the effects of market volatilities on Green Plains and SMLP Old 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 SMLP Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Plains and SMLP Old.

Diversification Opportunities for Green Plains and SMLP Old

0.0

Correlation Coefficient

Green Plains  SMLP Old

Pay attention - limited upside

The 3 months correlation between Green and SMLP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Green Plains Partners and SMLP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMLP Old 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 Partners are associated (or correlated) with SMLP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMLP Old has no effect on the direction of Green Plains i.e., Green Plains and SMLP Old go up and down completely randomly.

Pair Corralation between Green Plains and SMLP Old

If you would invest (100.00) in SMLP Old on December 1, 2024 and sell it today you would earn a total of  100.00  from holding SMLP Old or generate -100.0% return on investment over 90 days.

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

Green Plains Partners  vs.  SMLP Old

Green Plains Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Plains Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Green Plains is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SMLP Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SMLP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, SMLP Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Green Plains and SMLP Old

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

The idea behind Green Plains Partners and SMLP Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.