Correlation Between Ingredion Incorporated and Armanino Foods

Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Armanino Foods 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 Ingredion Incorporated and Armanino Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ingredion Incorporated and Armanino Foods New, you can compare the effects of market volatilities on Ingredion Incorporated and Armanino Foods 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 Ingredion Incorporated with a short position of Armanino Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Armanino Foods.

Diversification Opportunities for Ingredion Incorporated and Armanino Foods

0.66

Correlation Coefficient

Ingredion Incorporated  Armanino Foods

Poor diversification

The 3 months correlation between Ingredion and Armanino is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Armanino Foods New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armanino Foods New and Ingredion Incorporated 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 Ingredion Incorporated are associated (or correlated) with Armanino Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armanino Foods New has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Armanino Foods go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Armanino Foods

If you would invest  13,392  in Ingredion Incorporated on September 14, 2024 and sell it today you would earn a total of  1,043  from holding Ingredion Incorporated or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Ingredion Incorporated  vs.  Armanino Foods New

Ingredion Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Ingredion Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Armanino Foods New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armanino Foods New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Armanino Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ingredion Incorporated and Armanino Foods

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

The idea behind Ingredion Incorporated and Armanino Foods New 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.