Correlation Between Ingevity Corp and NewMarket
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and NewMarket 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 NewMarket into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and NewMarket, you can compare the effects of market volatilities on Ingevity Corp and NewMarket 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 NewMarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and NewMarket.
Diversification Opportunities for Ingevity Corp and NewMarket
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ingevity and NewMarket is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket 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 NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and NewMarket go up and down completely randomly.
Pair Corralation between Ingevity Corp and NewMarket
Given the investment horizon of 90 days Ingevity Corp is expected to under-perform the NewMarket. In addition to that, Ingevity Corp is 1.99 times more volatile than NewMarket. It trades about -0.01 of its total potential returns per unit of risk. NewMarket is currently generating about 0.09 per unit of volatility. If you would invest 30,424 in NewMarket on August 28, 2024 and sell it today you would earn a total of 24,017 from holding NewMarket or generate 78.94% 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. NewMarket
Performance |
| Timeline |
| Ingevity Corp |
| NewMarket |
Ingevity Corp and NewMarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and NewMarket
The main advantage of trading using opposite Ingevity Corp and NewMarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, NewMarket 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 NewMarket will offset losses from the drop in NewMarket's long position.| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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