Correlation Between INGEVITY and Sprott Focus

Can any of the company-specific risk be diversified away by investing in both INGEVITY and Sprott Focus 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 Sprott Focus 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 Sprott Focus Trust, you can compare the effects of market volatilities on INGEVITY and Sprott Focus 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 Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of INGEVITY and Sprott Focus.

Diversification Opportunities for INGEVITY and Sprott Focus

-0.2

Correlation Coefficient

INGEVITY  Sprott Focus

Good diversification

The 3 months correlation between INGEVITY and Sprott is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust 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 Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of INGEVITY i.e., INGEVITY and Sprott Focus go up and down completely randomly.

Pair Corralation between INGEVITY and Sprott Focus

Assuming the 90 days trading horizon INGEVITY is expected to generate 2.53 times less return on investment than Sprott Focus. But when comparing it to its historical volatility, INGEVITY P 3875 is 1.54 times less risky than Sprott Focus. It trades about 0.03 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  628.00  in Sprott Focus Trust on September 21, 2024 and sell it today you would earn a total of  99.00  from holding Sprott Focus Trust or generate 15.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.38%
Values	Daily Returns

INGEVITY P 3875  vs.  Sprott Focus Trust

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 abnormal 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.

Sprott Focus Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with INGEVITY and Sprott Focus

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

The idea behind INGEVITY P 3875 and Sprott Focus Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.