Correlation Between FutureFuel Corp and Ingevity Corp
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp 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 FutureFuel Corp and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and Ingevity Corp, you can compare the effects of market volatilities on FutureFuel Corp 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 FutureFuel Corp with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Ingevity Corp.
Diversification Opportunities for FutureFuel Corp and Ingevity Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FutureFuel and Ingevity is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and FutureFuel Corp 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 FutureFuel Corp 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 FutureFuel Corp i.e., FutureFuel Corp and Ingevity Corp go up and down completely randomly.
Pair Corralation between FutureFuel Corp and Ingevity Corp
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to generate 0.94 times more return on investment than Ingevity Corp. However, FutureFuel Corp is 1.07 times less risky than Ingevity Corp. It trades about 0.01 of its potential returns per unit of risk. Ingevity Corp is currently generating about -0.03 per unit of risk. If you would invest 577.00 in FutureFuel Corp on November 1, 2024 and sell it today you would lose (26.50) from holding FutureFuel Corp or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FutureFuel Corp vs. Ingevity Corp
Performance |
| Timeline |
| FutureFuel Corp |
| Ingevity Corp |
FutureFuel Corp and Ingevity Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and Ingevity Corp
The main advantage of trading using opposite FutureFuel Corp and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp 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.| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. Quaker Chemical | FutureFuel Corp vs. Ecovyst | FutureFuel Corp vs. Minerals Technologies |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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