Correlation Between Ingevity Corp and REX American
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and REX American 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 REX American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and REX American Resources, you can compare the effects of market volatilities on Ingevity Corp and REX American 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 REX American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and REX American.
Diversification Opportunities for Ingevity Corp and REX American
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ingevity and REX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and REX American Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX American Resources 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 REX American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX American Resources has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and REX American go up and down completely randomly.
Pair Corralation between Ingevity Corp and REX American
Given the investment horizon of 90 days Ingevity Corp is expected to under-perform the REX American. But the stock apears to be less risky and, when comparing its historical volatility, Ingevity Corp is 1.04 times less risky than REX American. The stock trades about -0.01 of its potential returns per unit of risk. The REX American Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,860 in REX American Resources on August 28, 2024 and sell it today you would earn a total of 1,603 from holding REX American Resources or generate 56.05% 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. REX American Resources
Performance |
| Timeline |
| Ingevity Corp |
| REX American Resources |
Ingevity Corp and REX American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and REX American
The main advantage of trading using opposite Ingevity Corp and REX American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, REX American 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 REX American will offset losses from the drop in REX American's long position.| Ingevity Corp vs. Oil Dri | Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Northern Technologies | Ingevity Corp vs. Cabot |
| REX American vs. Lsb Industries | REX American vs. AdvanSix | REX American vs. Tronox Holdings PLC | REX American vs. Methanex |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |