Correlation Between United States and Givaudan
Can any of the company-specific risk be diversified away by investing in both United States and Givaudan 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 United States and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Givaudan SA, you can compare the effects of market volatilities on United States and Givaudan 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 United States with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Givaudan.
Diversification Opportunities for United States and Givaudan
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Givaudan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and United States 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 United States Steel are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of United States i.e., United States and Givaudan go up and down completely randomly.
Pair Corralation between United States and Givaudan
Assuming the 90 days trading horizon United States Steel is expected to generate 3.26 times more return on investment than Givaudan. However, United States is 3.26 times more volatile than Givaudan SA. It trades about 0.09 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.24 per unit of risk. If you would invest 3,842 in United States Steel on September 3, 2024 and sell it today you would earn a total of 217.00 from holding United States Steel or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Givaudan SA
Performance |
| Timeline |
| United States Steel |
| Givaudan SA |
United States and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Givaudan
The main advantage of trading using opposite United States and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| United States vs. Catalyst Media Group | United States vs. CATLIN GROUP | United States vs. Magnora ASA | United States vs. RTW Venture Fund |
| Givaudan vs. Veolia Environnement VE | Givaudan vs. Dentsply Sirona | Givaudan vs. Tatton Asset Management | Givaudan vs. United States Steel |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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