Correlation Between Green Plains and AdvanSix

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

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

Diversification Opportunities for Green Plains and AdvanSix

0.63

Correlation Coefficient

Green Plains  AdvanSix

Poor diversification

The 3 months correlation between Green and AdvanSix is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Green Plains Renewable and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix 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 Renewable are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of Green Plains i.e., Green Plains and AdvanSix go up and down completely randomly.

Pair Corralation between Green Plains and AdvanSix

Given the investment horizon of 90 days Green Plains Renewable is expected to under-perform the AdvanSix. In addition to that, Green Plains is 2.14 times more volatile than AdvanSix. It trades about -0.17 of its total potential returns per unit of risk. AdvanSix is currently generating about -0.14 per unit of volatility. If you would invest  2,783  in AdvanSix on December 29, 2024 and sell it today you would lose (526.00) from holding AdvanSix or give up 18.9% of portfolio value over 90 days.

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

Green Plains Renewable  vs.  AdvanSix

Green Plains Renewable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Plains Renewable 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.

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Green Plains and AdvanSix

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

The idea behind Green Plains Renewable and AdvanSix 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.