Correlation Between Ingevity Corp and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and Minerals Technologies 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 Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and Minerals Technologies, you can compare the effects of market volatilities on Ingevity Corp and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and Minerals Technologies.
Diversification Opportunities for Ingevity Corp and Minerals Technologies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingevity and Minerals is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Minerals Technologies go up and down completely randomly.
Pair Corralation between Ingevity Corp and Minerals Technologies
Given the investment horizon of 90 days Ingevity Corp is expected to generate 2.37 times more return on investment than Minerals Technologies. However, Ingevity Corp is 2.37 times more volatile than Minerals Technologies. It trades about 0.12 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.11 per unit of risk. If you would invest 3,871 in Ingevity Corp on August 28, 2024 and sell it today you would earn a total of 1,150 from holding Ingevity Corp or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingevity Corp vs. Minerals Technologies
Performance |
| Timeline |
| Ingevity Corp |
| Minerals Technologies |
Ingevity Corp and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and Minerals Technologies
The main advantage of trading using opposite Ingevity Corp and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Ingevity Corp vs. Oil Dri | Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Northern Technologies | Ingevity Corp vs. Cabot |
| Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Northern Technologies | Minerals Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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