Correlation Between REDDY ICE and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both REDDY ICE and Ingredion Incorporated 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 REDDY ICE and Ingredion Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REDDY ICE P and Ingredion Incorporated, you can compare the effects of market volatilities on REDDY ICE and Ingredion Incorporated 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 REDDY ICE with a short position of Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of REDDY ICE and Ingredion Incorporated.
Diversification Opportunities for REDDY ICE and Ingredion Incorporated
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between REDDY and Ingredion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding REDDY ICE P and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and REDDY ICE 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 REDDY ICE P are associated (or correlated) with Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of REDDY ICE i.e., REDDY ICE and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between REDDY ICE and Ingredion Incorporated
If you would invest 10,873 in Ingredion Incorporated on January 21, 2024 and sell it today you would earn a total of 489.00 from holding Ingredion Incorporated or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
REDDY ICE P vs. Ingredion Incorporated
Performance |
| Timeline |
| REDDY ICE P |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ingredion Incorporated |
REDDY ICE and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REDDY ICE and Ingredion Incorporated
The main advantage of trading using opposite REDDY ICE and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REDDY ICE position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| REDDY ICE vs. US Silica Holdings | REDDY ICE vs. Simon Property Group | REDDY ICE vs. GMS Inc | REDDY ICE vs. LB Foster |
| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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