Correlation Between Ingredion Incorporated and Post Holdings

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Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Post Holdings 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 Post Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Post Holdings, you can compare the effects of market volatilities on Ingredion Incorporated and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Post Holdings.

Diversification Opportunities for Ingredion Incorporated and Post Holdings

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ingredion and Post is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Post Holdings go up and down completely randomly.

Pair Corralation between Ingredion Incorporated and Post Holdings

Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 2.25 times more return on investment than Post Holdings. However, Ingredion Incorporated is 2.25 times more volatile than Post Holdings. It trades about 0.06 of its potential returns per unit of risk. Post Holdings is currently generating about 0.05 per unit of risk. If you would invest  13,382  in Ingredion Incorporated on September 13, 2024 and sell it today you would earn a total of  1,061  from holding Ingredion Incorporated or generate 7.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ingredion Incorporated  vs.  Post Holdings

 Performance 
       Timeline  
Ingredion Incorporated 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 5 (%) 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.
Post Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Post Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Post Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ingredion Incorporated and Post Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ingredion Incorporated and Post Holdings

The main advantage of trading using opposite Ingredion Incorporated and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.
The idea behind Ingredion Incorporated and Post Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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