Correlation Between Valhi and American Vanguard

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

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

Diversification Opportunities for Valhi and American Vanguard

-0.54

Correlation Coefficient

Valhi  American Vanguard

Excellent diversification

The 3 months correlation between Valhi and American is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and Valhi 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 Valhi Inc 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 Valhi i.e., Valhi and American Vanguard go up and down completely randomly.

Pair Corralation between Valhi and American Vanguard

Considering the 90-day investment horizon Valhi Inc is expected to under-perform the American Vanguard. But the stock apears to be less risky and, when comparing its historical volatility, Valhi Inc is 1.53 times less risky than American Vanguard. The stock trades about -0.04 of its potential returns per unit of risk. The American Vanguard is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  413.00  in American Vanguard on May 7, 2025 and sell it today you would earn a total of  44.00  from holding American Vanguard or generate 10.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Valhi Inc  vs.  American Vanguard

Valhi Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Valhi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

American Vanguard

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, American Vanguard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valhi and American Vanguard

The main advantage of trading using opposite Valhi and American Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valhi 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 Valhi Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.