Correlation Between Ingredion Incorporated and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Lifeway Foods 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 Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Lifeway Foods, you can compare the effects of market volatilities on Ingredion Incorporated and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Lifeway Foods.
Diversification Opportunities for Ingredion Incorporated and Lifeway Foods
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ingredion and Lifeway is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Lifeway Foods go up and down completely randomly.
Pair Corralation between Ingredion Incorporated and Lifeway Foods
Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 1.09 times more return on investment than Lifeway Foods. However, Ingredion Incorporated is 1.09 times more volatile than Lifeway Foods. It trades about 0.14 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.1 per unit of risk. If you would invest 13,484 in Ingredion Incorporated on August 28, 2024 and sell it today you would earn a total of 1,344 from holding Ingredion Incorporated or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingredion Incorporated vs. Lifeway Foods
Performance |
| Timeline |
| Ingredion Incorporated |
| Lifeway Foods |
Ingredion Incorporated and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingredion Incorporated and Lifeway Foods
The main advantage of trading using opposite Ingredion Incorporated and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
| Lifeway Foods vs. Bellring Brands LLC | Lifeway Foods vs. Ingredion Incorporated | Lifeway Foods vs. Nomad Foods | Lifeway Foods vs. Simply Good Foods |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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