Correlation Between 00108WAK6 and American Vanguard

Can any of the company-specific risk be diversified away by investing in both 00108WAK6 and American Vanguard 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 00108WAK6 and American Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP Texas 345 and American Vanguard, you can compare the effects of market volatilities on 00108WAK6 and American Vanguard 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 00108WAK6 with a short position of American Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAK6 and American Vanguard.

Diversification Opportunities for 00108WAK6 and American Vanguard

-0.72

Correlation Coefficient

00108WAK6  American Vanguard

Pay attention - limited upside

The 3 months correlation between 00108WAK6 and American is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AEP Texas 345 and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and 00108WAK6 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 AEP Texas 345 are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of 00108WAK6 i.e., 00108WAK6 and American Vanguard go up and down completely randomly.

Pair Corralation between 00108WAK6 and American Vanguard

Assuming the 90 days trading horizon AEP Texas 345 is expected to generate 0.34 times more return on investment than American Vanguard. However, AEP Texas 345 is 2.95 times less risky than American Vanguard. It trades about 0.13 of its potential returns per unit of risk. American Vanguard is currently generating about 0.0 per unit of risk. If you would invest  6,772  in AEP Texas 345 on December 25, 2024 and sell it today you would earn a total of  481.00  from holding AEP Texas 345 or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.36%
Values	Daily Returns

AEP Texas 345  vs.  American Vanguard

AEP Texas 345

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP Texas 345 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAK6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Vanguard

Risk-Adjusted Performance

Weak

Over the last 90 days American Vanguard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with 00108WAK6 and American Vanguard

The main advantage of trading using opposite 00108WAK6 and American Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAK6 position performs unexpectedly, American Vanguard 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 American Vanguard will offset losses from the drop in American Vanguard's long position.

The idea behind AEP Texas 345 and American Vanguard 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.