Correlation Between MGP Ingredients and Andersons

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

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

Diversification Opportunities for MGP Ingredients and Andersons

0.17

Correlation Coefficient

MGP Ingredients  Andersons

Average diversification

The 3 months correlation between MGP and Andersons is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and The Andersons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andersons and MGP Ingredients 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 MGP Ingredients are associated (or correlated) with Andersons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andersons has no effect on the direction of MGP Ingredients i.e., MGP Ingredients and Andersons go up and down completely randomly.

Pair Corralation between MGP Ingredients and Andersons

Given the investment horizon of 90 days MGP Ingredients is expected to under-perform the Andersons. In addition to that, MGP Ingredients is 1.01 times more volatile than The Andersons. It trades about -0.07 of its total potential returns per unit of risk. The Andersons is currently generating about -0.02 per unit of volatility. If you would invest  3,678  in The Andersons on May 5, 2025 and sell it today you would lose (209.00) from holding The Andersons or give up 5.68% of portfolio value over 90 days.

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

MGP Ingredients  vs.  The Andersons

MGP Ingredients

Risk-Adjusted Performance

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Andersons

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Andersons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Andersons is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MGP Ingredients and Andersons

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

The idea behind MGP Ingredients and The Andersons 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.