Correlation Between Ingevity Corp and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and Quaker Chemical 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 Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and Quaker Chemical, you can compare the effects of market volatilities on Ingevity Corp and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and Quaker Chemical.
Diversification Opportunities for Ingevity Corp and Quaker Chemical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ingevity and Quaker is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Quaker Chemical go up and down completely randomly.
Pair Corralation between Ingevity Corp and Quaker Chemical
Given the investment horizon of 90 days Ingevity Corp is expected to generate 1.78 times more return on investment than Quaker Chemical. However, Ingevity Corp is 1.78 times more volatile than Quaker Chemical. It trades about 0.02 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.03 per unit of risk. If you would invest 4,725 in Ingevity Corp on September 2, 2024 and sell it today you would earn a total of 132.00 from holding Ingevity Corp or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingevity Corp vs. Quaker Chemical
Performance |
| Timeline |
| Ingevity Corp |
| Quaker Chemical |
Ingevity Corp and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and Quaker Chemical
The main advantage of trading using opposite Ingevity Corp and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Minerals Technologies | Ingevity Corp vs. Quaker Chemical | Ingevity Corp vs. Oil Dri |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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