Correlation Between Ingevity Corp and Taiga Building
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and Taiga Building 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 Taiga Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and Taiga Building Products, you can compare the effects of market volatilities on Ingevity Corp and Taiga Building 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 Taiga Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and Taiga Building.
Diversification Opportunities for Ingevity Corp and Taiga Building
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ingevity and Taiga is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Taiga Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiga Building Products 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 Taiga Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiga Building Products has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Taiga Building go up and down completely randomly.
Pair Corralation between Ingevity Corp and Taiga Building
Given the investment horizon of 90 days Ingevity Corp is expected to generate 3.92 times more return on investment than Taiga Building. However, Ingevity Corp is 3.92 times more volatile than Taiga Building Products. It trades about 0.09 of its potential returns per unit of risk. Taiga Building Products is currently generating about -0.08 per unit of risk. If you would invest 3,953 in Ingevity Corp on August 30, 2024 and sell it today you would earn a total of 820.00 from holding Ingevity Corp or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingevity Corp vs. Taiga Building Products
Performance |
| Timeline |
| Ingevity Corp |
| Taiga Building Products |
Ingevity Corp and Taiga Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and Taiga Building
The main advantage of trading using opposite Ingevity Corp and Taiga Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, Taiga Building 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 Taiga Building will offset losses from the drop in Taiga Building'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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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