Correlation Between American Vanguard and Chemours

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

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

Diversification Opportunities for American Vanguard and Chemours

-0.16

Correlation Coefficient

American Vanguard  Chemours

Good diversification

The 3 months correlation between American and Chemours is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding American Vanguard and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours and American Vanguard 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 American Vanguard are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of American Vanguard i.e., American Vanguard and Chemours go up and down completely randomly.

Pair Corralation between American Vanguard and Chemours

Considering the 90-day investment horizon American Vanguard is expected to under-perform the Chemours. But the stock apears to be less risky and, when comparing its historical volatility, American Vanguard is 2.13 times less risky than Chemours. The stock trades about -0.37 of its potential returns per unit of risk. The Chemours Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,729  in Chemours Co on January 20, 2024 and sell it today you would lose (81.00) from holding Chemours Co or give up 2.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

American Vanguard  vs.  Chemours Co

American Vanguard

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Vanguard may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Vanguard and Chemours

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

The idea behind American Vanguard and Chemours Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.