Correlation Between Givaudan and Cadence Minerals
Can any of the company-specific risk be diversified away by investing in both Givaudan and Cadence Minerals 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 Givaudan and Cadence Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Cadence Minerals PLC, you can compare the effects of market volatilities on Givaudan and Cadence Minerals 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 Givaudan with a short position of Cadence Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Cadence Minerals.
Diversification Opportunities for Givaudan and Cadence Minerals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Givaudan and Cadence is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Cadence Minerals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Minerals PLC and Givaudan 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 Givaudan SA are associated (or correlated) with Cadence Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Minerals PLC has no effect on the direction of Givaudan i.e., Givaudan and Cadence Minerals go up and down completely randomly.
Pair Corralation between Givaudan and Cadence Minerals
Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Cadence Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 2.66 times less risky than Cadence Minerals. The stock trades about -0.2 of its potential returns per unit of risk. The Cadence Minerals PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 235.00 in Cadence Minerals PLC on September 2, 2024 and sell it today you would lose (5.00) from holding Cadence Minerals PLC or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Cadence Minerals PLC
Performance |
| Timeline |
| Givaudan SA |
| Cadence Minerals PLC |
Givaudan and Cadence Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Cadence Minerals
The main advantage of trading using opposite Givaudan and Cadence Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Cadence Minerals 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 Cadence Minerals will offset losses from the drop in Cadence Minerals' long position.| Givaudan vs. Ecclesiastical Insurance Office | Givaudan vs. Elmos Semiconductor SE | Givaudan vs. BE Semiconductor Industries | Givaudan vs. Taiwan Semiconductor Manufacturing |
| Cadence Minerals vs. Givaudan SA | Cadence Minerals vs. Antofagasta PLC | Cadence Minerals vs. Centamin PLC | Cadence Minerals vs. Atalaya Mining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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