Correlation Between Linde Plc and Ingevity Corp
Can any of the company-specific risk be diversified away by investing in both Linde Plc 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 Linde Plc and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Ingevity Corp, you can compare the effects of market volatilities on Linde Plc 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 Linde Plc with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Ingevity Corp.
Diversification Opportunities for Linde Plc and Ingevity Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Linde and Ingevity is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Linde Plc 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 Linde plc Ordinary 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 Linde Plc i.e., Linde Plc and Ingevity Corp go up and down completely randomly.
Pair Corralation between Linde Plc and Ingevity Corp
Considering the 90-day investment horizon Linde plc Ordinary is expected to generate 0.38 times more return on investment than Ingevity Corp. However, Linde plc Ordinary is 2.63 times less risky than Ingevity Corp. It trades about 0.07 of its potential returns per unit of risk. Ingevity Corp is currently generating about -0.01 per unit of risk. If you would invest 32,402 in Linde plc Ordinary on August 27, 2024 and sell it today you would earn a total of 13,076 from holding Linde plc Ordinary or generate 40.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Ingevity Corp
Performance |
| Timeline |
| Linde plc Ordinary |
| Ingevity Corp |
Linde Plc and Ingevity Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Ingevity Corp
The main advantage of trading using opposite Linde Plc and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc 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.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
| Ingevity Corp vs. Oil Dri | Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Northern Technologies | Ingevity Corp vs. Cabot |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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