Correlation Between Ingredion Incorporated and JBS SA

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

By analyzing existing cross correlation between Ingredion Incorporated and JBS SA, you can compare the effects of market volatilities on Ingredion Incorporated and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and JBS SA.

Diversification Opportunities for Ingredion Incorporated and JBS SA

0.56

Correlation Coefficient

Ingredion Incorporated  JBS SA

Very weak diversification

The 3 months correlation between Ingredion and JBS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and JBS SA go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and JBS SA

Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 1.13 times more return on investment than JBS SA. However, Ingredion Incorporated is 1.13 times more volatile than JBS SA. It trades about 0.06 of its potential returns per unit of risk. JBS SA is currently generating about 0.07 per unit of risk. If you would invest  13,392  in Ingredion Incorporated on September 14, 2024 and sell it today you would earn a total of  1,051  from holding Ingredion Incorporated or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ingredion Incorporated  vs.  JBS SA

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.

JBS SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ingredion Incorporated and JBS SA

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

The idea behind Ingredion Incorporated and JBS SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.