Correlation Between Ingredion Incorporated and Denison Mines

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

By analyzing existing cross correlation between Ingredion Incorporated and Denison Mines Corp, you can compare the effects of market volatilities on Ingredion Incorporated and Denison Mines 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 Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Denison Mines.

Diversification Opportunities for Ingredion Incorporated and Denison Mines

0.34

Correlation Coefficient

Ingredion Incorporated  Denison Mines

Weak diversification

The 3 months correlation between Ingredion and Denison is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Denison Mines go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Denison Mines

Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 0.17 times more return on investment than Denison Mines. However, Ingredion Incorporated is 5.94 times less risky than Denison Mines. It trades about -0.44 of its potential returns per unit of risk. Denison Mines Corp is currently generating about -0.1 per unit of risk. If you would invest  14,198  in Ingredion Incorporated on October 9, 2024 and sell it today you would lose (926.00) from holding Ingredion Incorporated or give up 6.52% of portfolio value over 90 days.

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

Ingredion Incorporated  vs.  Denison Mines Corp

Ingredion Incorporated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Denison Mines Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingredion Incorporated and Denison Mines

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

The idea behind Ingredion Incorporated and Denison Mines 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.