Correlation Between Element Solutions and Ingevity Corp

Can any of the company-specific risk be diversified away by investing in both Element Solutions and Ingevity Corp 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 Element Solutions and Ingevity Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Element Solutions and Ingevity Corp, you can compare the effects of market volatilities on Element Solutions and Ingevity Corp 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 Element Solutions with a short position of Ingevity Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Ingevity Corp.

Diversification Opportunities for Element Solutions and Ingevity Corp

0.95

Correlation Coefficient

Element Solutions  Ingevity Corp

Almost no diversification

The 3 months correlation between Element and Ingevity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Ingevity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingevity Corp and Element Solutions 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 Element Solutions are associated (or correlated) with Ingevity Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingevity Corp has no effect on the direction of Element Solutions i.e., Element Solutions and Ingevity Corp go up and down completely randomly.

Pair Corralation between Element Solutions and Ingevity Corp

Considering the 90-day investment horizon Element Solutions is expected to generate 1.04 times more return on investment than Ingevity Corp. However, Element Solutions is 1.04 times more volatile than Ingevity Corp. It trades about -0.09 of its potential returns per unit of risk. Ingevity Corp is currently generating about -0.16 per unit of risk. If you would invest  2,261  in Element Solutions on January 28, 2025 and sell it today you would lose (257.00) from holding Element Solutions or give up 11.37% of portfolio value over 90 days.

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

Element Solutions  vs.  Ingevity Corp

Element Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Ingevity Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingevity Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Element Solutions and Ingevity Corp

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

The idea behind Element Solutions and Ingevity Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.