Correlation Between Ingredion Incorporated and Albertsons Companies

Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Albertsons Companies 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 Ingredion Incorporated and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ingredion Incorporated and Albertsons Companies, you can compare the effects of market volatilities on Ingredion Incorporated and Albertsons Companies 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 Ingredion Incorporated with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Albertsons Companies.

Diversification Opportunities for Ingredion Incorporated and Albertsons Companies

-0.63

Correlation Coefficient

Ingredion Incorporated  Albertsons Companies

Excellent diversification

The 3 months correlation between Ingredion and Albertsons is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Ingredion Incorporated 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 Ingredion Incorporated are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Albertsons Companies go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Albertsons Companies

Given the investment horizon of 90 days Ingredion Incorporated is expected to under-perform the Albertsons Companies. But the stock apears to be less risky and, when comparing its historical volatility, Ingredion Incorporated is 1.28 times less risky than Albertsons Companies. The stock trades about -0.07 of its potential returns per unit of risk. The Albertsons Companies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,948  in Albertsons Companies on December 22, 2024 and sell it today you would earn a total of  166.00  from holding Albertsons Companies or generate 8.52% return on investment over 90 days.

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

Ingredion Incorporated  vs.  Albertsons Companies

Ingredion Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingredion Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Ingredion Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ingredion Incorporated and Albertsons Companies

The main advantage of trading using opposite Ingredion Incorporated and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.

The idea behind Ingredion Incorporated and Albertsons Companies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.