Correlation Between INGEVITY and GE Vernova

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

Diversification Opportunities for INGEVITY and GE Vernova

-0.21

Correlation Coefficient

INGEVITY  GE Vernova

Very good diversification

The 3 months correlation between INGEVITY and GEV is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of INGEVITY i.e., INGEVITY and GE Vernova go up and down completely randomly.

Pair Corralation between INGEVITY and GE Vernova

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to generate 22.22 times more return on investment than GE Vernova. However, INGEVITY is 22.22 times more volatile than GE Vernova LLC. It trades about 0.06 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.18 per unit of risk. If you would invest  8,651  in INGEVITY P 3875 on September 21, 2024 and sell it today you would lose (120.00) from holding INGEVITY P 3875 or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.5%
Values	Daily Returns

INGEVITY P 3875  vs.  GE Vernova LLC

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 abnormal performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for INGEVITY P 3875 investors.

GE Vernova LLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INGEVITY and GE Vernova

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

The idea behind INGEVITY P 3875 and GE Vernova LLC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.