Correlation Between INGEVITY and Old Republic

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

Diversification Opportunities for INGEVITY and Old Republic

0.35

Correlation Coefficient

INGEVITY  Old Republic

Weak diversification

The 3 months correlation between INGEVITY and Old is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of INGEVITY i.e., INGEVITY and Old Republic go up and down completely randomly.

Pair Corralation between INGEVITY and Old Republic

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to under-perform the Old Republic. But the bond apears to be less risky and, when comparing its historical volatility, INGEVITY P 3875 is 1.14 times less risky than Old Republic. The bond trades about -0.18 of its potential returns per unit of risk. The Old Republic International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,517  in Old Republic International on September 30, 2024 and sell it today you would earn a total of  124.00  from holding Old Republic International or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

INGEVITY P 3875  vs.  Old Republic International

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.

Old Republic Interna

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with INGEVITY and Old Republic

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

The idea behind INGEVITY P 3875 and Old Republic International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.