Correlation Between Ingevity Corp and Cabot
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and Cabot 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 Ingevity Corp and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and Cabot, you can compare the effects of market volatilities on Ingevity Corp and Cabot 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 Ingevity Corp with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and Cabot.
Diversification Opportunities for Ingevity Corp and Cabot
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ingevity and Cabot is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Ingevity 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 Ingevity Corp are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Cabot go up and down completely randomly.
Pair Corralation between Ingevity Corp and Cabot
Given the investment horizon of 90 days Ingevity Corp is expected to generate 2.38 times more return on investment than Cabot. However, Ingevity Corp is 2.38 times more volatile than Cabot. It trades about 0.21 of its potential returns per unit of risk. Cabot is currently generating about -0.15 per unit of risk. If you would invest 4,075 in Ingevity Corp on November 1, 2024 and sell it today you would earn a total of 539.00 from holding Ingevity Corp or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingevity Corp vs. Cabot
Performance |
| Timeline |
| Ingevity Corp |
| Cabot |
Ingevity Corp and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and Cabot
The main advantage of trading using opposite Ingevity Corp and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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