Correlation Between Orion Engineered and Ingevity Corp
Can any of the company-specific risk be diversified away by investing in both Orion Engineered and Ingevity Corp 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 Orion Engineered and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Engineered Carbons and Ingevity Corp, you can compare the effects of market volatilities on Orion Engineered and Ingevity Corp 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 Orion Engineered with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and Ingevity Corp.
Diversification Opportunities for Orion Engineered and Ingevity Corp
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orion and Ingevity is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with Ingevity Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevity Corp has no effect on the direction of Orion Engineered i.e., Orion Engineered and Ingevity Corp go up and down completely randomly.
Pair Corralation between Orion Engineered and Ingevity Corp
Considering the 90-day investment horizon Orion Engineered Carbons is expected to under-perform the Ingevity Corp. But the stock apears to be less risky and, when comparing its historical volatility, Orion Engineered Carbons is 1.45 times less risky than Ingevity Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Ingevity Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,114 in Ingevity Corp on October 24, 2024 and sell it today you would earn a total of 659.00 from holding Ingevity Corp or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. Ingevity Corp
Performance |
| Timeline |
| Orion Engineered Carbons |
| Ingevity Corp |
Orion Engineered and Ingevity Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and Ingevity Corp
The main advantage of trading using opposite Orion Engineered and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, Ingevity Corp 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 Ingevity Corp will offset losses from the drop in Ingevity Corp's long position.| Orion Engineered vs. Innospec | Orion Engineered vs. H B Fuller | Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies |
| Ingevity Corp vs. H B Fuller | Ingevity Corp vs. Minerals Technologies | Ingevity Corp vs. Quaker Chemical | Ingevity Corp vs. Oil Dri |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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