Correlation Between Ingevity Corp and Volvo AB
Can any of the company-specific risk be diversified away by investing in both Ingevity Corp and Volvo AB 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 Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingevity Corp and Volvo AB ADR, you can compare the effects of market volatilities on Ingevity Corp and Volvo AB 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 Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingevity Corp and Volvo AB.
Diversification Opportunities for Ingevity Corp and Volvo AB
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ingevity and Volvo is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Volvo AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ADR 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 Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ADR has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Volvo AB go up and down completely randomly.
Pair Corralation between Ingevity Corp and Volvo AB
Given the investment horizon of 90 days Ingevity Corp is expected to under-perform the Volvo AB. In addition to that, Ingevity Corp is 1.65 times more volatile than Volvo AB ADR. It trades about -0.01 of its total potential returns per unit of risk. Volvo AB ADR is currently generating about 0.05 per unit of volatility. If you would invest 1,652 in Volvo AB ADR on August 30, 2024 and sell it today you would earn a total of 812.00 from holding Volvo AB ADR or generate 49.15% 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. Volvo AB ADR
Performance |
| Timeline |
| Ingevity Corp |
| Volvo AB ADR |
Ingevity Corp and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingevity Corp and Volvo AB
The main advantage of trading using opposite Ingevity Corp and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingevity Corp position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Minerals Technologies | Ingevity Corp vs. Quaker Chemical | Ingevity Corp vs. Oil Dri |
| Volvo AB vs. Deere Company | Volvo AB vs. Columbus McKinnon | Volvo AB vs. Hyster Yale Materials Handling | Volvo AB vs. Manitowoc |
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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