Correlation Between Mercer International and American Vanguard
Can any of the company-specific risk be diversified away by investing in both Mercer International 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 Mercer International and American Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercer International and American Vanguard, you can compare the effects of market volatilities on Mercer International 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 Mercer International with a short position of American Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercer International and American Vanguard.
Diversification Opportunities for Mercer International and American Vanguard
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercer and American is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mercer International and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Mercer International 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 Mercer International 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 Mercer International i.e., Mercer International and American Vanguard go up and down completely randomly.
Pair Corralation between Mercer International and American Vanguard
Given the investment horizon of 90 days Mercer International is expected to under-perform the American Vanguard. In addition to that, Mercer International is 1.32 times more volatile than American Vanguard. It trades about -0.2 of its total potential returns per unit of risk. American Vanguard is currently generating about -0.1 per unit of volatility. If you would invest 539.00 in American Vanguard on September 9, 2025 and sell it today you would lose (109.00) from holding American Vanguard or give up 20.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercer International vs. American Vanguard
Performance |
| Timeline |
| Mercer International |
| American Vanguard |
Mercer International and American Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercer International and American Vanguard
The main advantage of trading using opposite Mercer International and American Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercer International 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.| Mercer International vs. American Vanguard | Mercer International vs. Lavoro Limited Class | Mercer International vs. Bioceres Crop Solutions | Mercer International vs. US GoldMining Common |
| American Vanguard vs. Bioceres Crop Solutions | American Vanguard vs. Lavoro Limited Class | American Vanguard vs. Mercer International | American Vanguard vs. BioHarvest Sciences Common |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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