Correlation Between INGEVITY and InMode

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

Diversification Opportunities for INGEVITY and InMode

-0.09

Correlation Coefficient

INGEVITY  InMode

Good diversification

The 3 months correlation between INGEVITY and InMode is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode 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 InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of INGEVITY i.e., INGEVITY and InMode go up and down completely randomly.

Pair Corralation between INGEVITY and InMode

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to generate 21.99 times more return on investment than InMode. However, INGEVITY is 21.99 times more volatile than InMode. It trades about 0.06 of its potential returns per unit of risk. InMode is currently generating about -0.03 per unit of risk. If you would invest  8,648  in INGEVITY P 3875 on September 20, 2024 and sell it today you would lose (339.00) from holding INGEVITY P 3875 or give up 3.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.09%
Values	Daily Returns

INGEVITY P 3875  vs.  InMode

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 weak 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.

InMode

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days InMode has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, InMode 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 InMode

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

The idea behind INGEVITY P 3875 and InMode 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.