Correlation Between Simply Good and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both Simply Good and Ingredion Incorporated 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 Simply Good and Ingredion Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simply Good Foods and Ingredion Incorporated, you can compare the effects of market volatilities on Simply Good and Ingredion Incorporated 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 Simply Good with a short position of Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simply Good and Ingredion Incorporated.
Diversification Opportunities for Simply Good and Ingredion Incorporated
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simply and Ingredion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Simply Good Foods and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and Simply Good 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 Simply Good Foods are associated (or correlated) with Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of Simply Good i.e., Simply Good and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between Simply Good and Ingredion Incorporated
Given the investment horizon of 90 days Simply Good Foods is expected to generate 0.38 times more return on investment than Ingredion Incorporated. However, Simply Good Foods is 2.63 times less risky than Ingredion Incorporated. It trades about 0.54 of its potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.14 per unit of risk. If you would invest 3,384 in Simply Good Foods on August 28, 2024 and sell it today you would earn a total of 600.00 from holding Simply Good Foods or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simply Good Foods vs. Ingredion Incorporated
Performance |
| Timeline |
| Simply Good Foods |
| Ingredion Incorporated |
Simply Good and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simply Good and Ingredion Incorporated
The main advantage of trading using opposite Simply Good and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simply Good position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| Simply Good vs. Post Holdings | Simply Good vs. Treehouse Foods | Simply Good vs. J J Snack | Simply Good vs. Central Garden Pet |
| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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