Correlation Between Bon Natural and Ingredion Incorporated

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

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

Diversification Opportunities for Bon Natural and Ingredion Incorporated

-0.3

Correlation Coefficient

Bon Natural  Ingredion Incorporated

Very good diversification

The 3 months correlation between Bon and Ingredion is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and Bon Natural 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 Bon Natural Life 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 Bon Natural i.e., Bon Natural and Ingredion Incorporated go up and down completely randomly.

Pair Corralation between Bon Natural and Ingredion Incorporated

Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Ingredion Incorporated. In addition to that, Bon Natural is 6.65 times more volatile than Ingredion Incorporated. It trades about -0.08 of its total potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.06 per unit of volatility. If you would invest  11,255  in Ingredion Incorporated on March 5, 2025 and sell it today you would earn a total of  2,640  from holding Ingredion Incorporated or generate 23.46% return on investment over 90 days.

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

Bon Natural Life  vs.  Ingredion Incorporated

Bon Natural Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ingredion Incorporated

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 6 (%) 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 July 2025.

Pair Trading with Bon Natural and Ingredion Incorporated

The main advantage of trading using opposite Bon Natural and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bon Natural 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.

The idea behind Bon Natural Life and Ingredion Incorporated 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.