Correlation Between INGEVITY and Marchex

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

Diversification Opportunities for INGEVITY and Marchex

-0.19

Correlation Coefficient

INGEVITY  Marchex

Good diversification

The 3 months correlation between INGEVITY and Marchex is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of INGEVITY i.e., INGEVITY and Marchex go up and down completely randomly.

Pair Corralation between INGEVITY and Marchex

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to under-perform the Marchex. But the bond apears to be less risky and, when comparing its historical volatility, INGEVITY P 3875 is 7.88 times less risky than Marchex. The bond trades about -0.01 of its potential returns per unit of risk. The Marchex is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Marchex on October 8, 2024 and sell it today you would earn a total of  7.00  from holding Marchex or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

INGEVITY P 3875  vs.  Marchex

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 somewhat strong basic indicators, INGEVITY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Marchex

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INGEVITY and Marchex

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

The idea behind INGEVITY P 3875 and Marchex 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.