Correlation Between Associated British and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Ingredion Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Ingredion Incorporated, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Ingredion Incorporated.
Diversification Opportunities for Associated British and Ingredion Incorporated
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Ingredion is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between Associated British and Ingredion Incorporated
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Ingredion Incorporated. But the pink sheet apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.08 times less risky than Ingredion Incorporated. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Ingredion Incorporated is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,510 in Ingredion Incorporated on August 30, 2024 and sell it today you would earn a total of 3,193 from holding Ingredion Incorporated or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Ingredion Incorporated
Performance |
| Timeline |
| Associated British Foods |
| Ingredion Incorporated |
Associated British and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Ingredion Incorporated
The main advantage of trading using opposite Associated British and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Artisan Consumer Goods | Associated British vs. Altavoz Entertainment | Associated British vs. Avi Ltd ADR | Associated British vs. The a2 Milk |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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