Correlation Between Ingredion Incorporated and Smithfield Foods,
Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Smithfield Foods, 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 Smithfield Foods, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Smithfield Foods, Common, you can compare the effects of market volatilities on Ingredion Incorporated and Smithfield Foods, 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 Smithfield Foods,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Smithfield Foods,.
Diversification Opportunities for Ingredion Incorporated and Smithfield Foods,
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingredion and Smithfield is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Smithfield Foods, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithfield Foods, Common 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 Smithfield Foods,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithfield Foods, Common has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Smithfield Foods, go up and down completely randomly.
Pair Corralation between Ingredion Incorporated and Smithfield Foods,
Given the investment horizon of 90 days Ingredion Incorporated is expected to under-perform the Smithfield Foods,. But the stock apears to be less risky and, when comparing its historical volatility, Ingredion Incorporated is 1.42 times less risky than Smithfield Foods,. The stock trades about -0.2 of its potential returns per unit of risk. The Smithfield Foods, Common is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,526 in Smithfield Foods, Common on August 13, 2025 and sell it today you would lose (330.00) from holding Smithfield Foods, Common or give up 13.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingredion Incorporated vs. Smithfield Foods, Common
Performance |
| Timeline |
| Ingredion Incorporated |
| Smithfield Foods, Common |
Ingredion Incorporated and Smithfield Foods, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingredion Incorporated and Smithfield Foods,
The main advantage of trading using opposite Ingredion Incorporated and Smithfield Foods, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Smithfield Foods, 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 Smithfield Foods, will offset losses from the drop in Smithfield Foods,'s long position.| Ingredion Incorporated vs. ConAgra Foods | Ingredion Incorporated vs. Campbells Co | Ingredion Incorporated vs. Pilgrims Pride Corp | Ingredion Incorporated vs. Post Holdings |
| Smithfield Foods, vs. ConAgra Foods | Smithfield Foods, vs. Pilgrims Pride Corp | Smithfield Foods, vs. Molson Coors Brewing | Smithfield Foods, vs. Campbells Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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