Correlation Between INGEVITY and American Vanguard

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

By analyzing existing cross correlation between INGEVITY P 3875 and American Vanguard, you can compare the effects of market volatilities on INGEVITY and American Vanguard 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 with a short position of American Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of INGEVITY and American Vanguard.

Diversification Opportunities for INGEVITY and American Vanguard

0.11

Correlation Coefficient

INGEVITY  American Vanguard

Average diversification

The 3 months correlation between INGEVITY and American is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and INGEVITY 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 P 3875 are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of INGEVITY i.e., INGEVITY and American Vanguard go up and down completely randomly.

Pair Corralation between INGEVITY and American Vanguard

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to under-perform the American Vanguard. But the bond apears to be less risky and, when comparing its historical volatility, INGEVITY P 3875 is 1.27 times less risky than American Vanguard. The bond trades about -0.25 of its potential returns per unit of risk. The American Vanguard is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  435.00  in American Vanguard on October 23, 2024 and sell it today you would earn a total of  73.00  from holding American Vanguard or generate 16.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.22%
Values	Daily Returns

INGEVITY P 3875  vs.  American Vanguard

INGEVITY P 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGEVITY P 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGEVITY P 3875 investors.

American Vanguard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Vanguard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, American Vanguard is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with INGEVITY and American Vanguard

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

The idea behind INGEVITY P 3875 and American Vanguard 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.