Correlation Between Core Molding and Ingevity Corp

Can any of the company-specific risk be diversified away by investing in both Core Molding 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 Core Molding and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Molding Technologies and Ingevity Corp, you can compare the effects of market volatilities on Core Molding 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 Core Molding with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and Ingevity Corp.

Diversification Opportunities for Core Molding and Ingevity Corp

-0.03

Correlation Coefficient

Core Molding  Ingevity Corp

Good diversification

The 3 months correlation between Core and Ingevity is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Core Molding 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 Core Molding Technologies 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 Core Molding i.e., Core Molding and Ingevity Corp go up and down completely randomly.

Pair Corralation between Core Molding and Ingevity Corp

Considering the 90-day investment horizon Core Molding Technologies is expected to under-perform the Ingevity Corp. But the stock apears to be less risky and, when comparing its historical volatility, Core Molding Technologies is 1.71 times less risky than Ingevity Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Ingevity Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,811  in Ingevity Corp on September 2, 2024 and sell it today you would earn a total of  1,046  from holding Ingevity Corp or generate 27.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Core Molding Technologies  vs.  Ingevity Corp

Core Molding Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Core Molding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ingevity Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ingevity Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Ingevity Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core Molding and Ingevity Corp

The main advantage of trading using opposite Core Molding and Ingevity Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Molding 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.

The idea behind Core Molding Technologies and Ingevity Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.