Correlation Between American Coastal and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both American Coastal and Ingredion Incorporated 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 Coastal and Ingredion Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Coastal Insurance and Ingredion Incorporated, you can compare the effects of market volatilities on American Coastal and Ingredion Incorporated 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 Coastal with a short position of Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Coastal and Ingredion Incorporated.
Diversification Opportunities for American Coastal and Ingredion Incorporated
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Ingredion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Coastal Insurance and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and American Coastal 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 Coastal Insurance are associated (or correlated) with Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of American Coastal i.e., American Coastal and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between American Coastal and Ingredion Incorporated
Given the investment horizon of 90 days American Coastal Insurance is expected to generate 1.92 times more return on investment than Ingredion Incorporated. However, American Coastal is 1.92 times more volatile than Ingredion Incorporated. It trades about 0.04 of its potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.07 per unit of risk. If you would invest 1,080 in American Coastal Insurance on November 3, 2024 and sell it today you would earn a total of 139.00 from holding American Coastal Insurance or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Coastal Insurance vs. Ingredion Incorporated
Performance |
| Timeline |
| American Coastal Ins |
| Ingredion Incorporated |
American Coastal and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Coastal and Ingredion Incorporated
The main advantage of trading using opposite American Coastal and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Coastal position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| American Coastal vs. Exchange Bankshares | American Coastal vs. Clear Channel Outdoor | American Coastal vs. Townsquare Media | American Coastal vs. Discover Financial Services |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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