Correlation Between Ingredion Incorporated and Balchem

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Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Balchem 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 Ingredion Incorporated and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Balchem, you can compare the effects of market volatilities on Ingredion Incorporated and Balchem 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 Ingredion Incorporated with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Balchem.

Diversification Opportunities for Ingredion Incorporated and Balchem

IngredionBalchemDiversified AwayIngredionBalchemDiversified Away100%
0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ingredion and Balchem is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Ingredion Incorporated 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 Ingredion Incorporated are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Balchem go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Balchem

Given the investment horizon of 90 days Ingredion Incorporated is expected to under-perform the Balchem. In addition to that, Ingredion Incorporated is 1.23 times more volatile than Balchem. It trades about -0.2 of its total potential returns per unit of risk. Balchem is currently generating about 0.04 per unit of volatility. If you would invest  16,221  in Balchem on November 24, 2024 and sell it today you would earn a total of  152.00  from holding Balchem or generate 0.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ingredion Incorporated  vs.  Balchem

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15INGR BCPC
       Timeline  
Ingredion Incorporated 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ingredion Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb125130135140145150
Balchem 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Balchem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb155160165170175180185

Ingredion Incorporated and Balchem Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.36-1.82-1.28-0.74-0.20.30.841.381.922.46 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15INGR BCPC
       Returns  

Pair Trading with Ingredion Incorporated and Balchem

The main advantage of trading using opposite Ingredion Incorporated and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.
The idea behind Ingredion Incorporated and Balchem 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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