Correlation Between Ingevity Corp and Orion Engineered

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

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

Diversification Opportunities for Ingevity Corp and Orion Engineered

-0.32

Correlation Coefficient

Ingevity Corp  Orion Engineered

Very good diversification

The 3 months correlation between Ingevity and Orion is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ingevity Corp and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons and Ingevity Corp 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 Ingevity Corp are associated (or correlated) with Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Ingevity Corp i.e., Ingevity Corp and Orion Engineered go up and down completely randomly.

Pair Corralation between Ingevity Corp and Orion Engineered

Given the investment horizon of 90 days Ingevity Corp is expected to generate 1.34 times more return on investment than Orion Engineered. However, Ingevity Corp is 1.34 times more volatile than Orion Engineered Carbons. It trades about 0.01 of its potential returns per unit of risk. Orion Engineered Carbons is currently generating about -0.11 per unit of risk. If you would invest  4,015  in Ingevity Corp on December 28, 2024 and sell it today you would lose (53.00) from holding Ingevity Corp or give up 1.32% of portfolio value over 90 days.

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

Ingevity Corp  vs.  Orion Engineered Carbons

Ingevity Corp

Risk-Adjusted Performance

Very Weak

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

Orion Engineered Carbons

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ingevity Corp and Orion Engineered

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

The idea behind Ingevity Corp and Orion Engineered Carbons 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.