Correlation Between Balchem and Ingevity Corp
Can any of the company-specific risk be diversified away by investing in both Balchem and Ingevity Corp 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 Balchem and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Ingevity Corp, you can compare the effects of market volatilities on Balchem and Ingevity Corp 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 Balchem with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Ingevity Corp.
Diversification Opportunities for Balchem and Ingevity Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balchem and Ingevity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Balchem 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 Balchem are associated (or correlated) with Ingevity Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevity Corp has no effect on the direction of Balchem i.e., Balchem and Ingevity Corp go up and down completely randomly.
Pair Corralation between Balchem and Ingevity Corp
Given the investment horizon of 90 days Balchem is expected to generate 16.1 times less return on investment than Ingevity Corp. But when comparing it to its historical volatility, Balchem is 2.9 times less risky than Ingevity Corp. It trades about 0.04 of its potential returns per unit of risk. Ingevity Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,954 in Ingevity Corp on November 3, 2024 and sell it today you would earn a total of 629.00 from holding Ingevity Corp or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Ingevity Corp
Performance |
| Timeline |
| Balchem |
| Ingevity Corp |
Balchem and Ingevity Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Ingevity Corp
The main advantage of trading using opposite Balchem and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Ingevity Corp 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 Ingevity Corp will offset losses from the drop in Ingevity Corp's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Minerals Technologies | Ingevity Corp vs. Quaker Chemical | Ingevity Corp vs. Oil Dri |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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