Correlation Between Albemarle Corp and International Flavors
Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and International Flavors 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 Albemarle Corp and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle Corp and International Flavors Fragrances, you can compare the effects of market volatilities on Albemarle Corp and International Flavors 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 Albemarle Corp with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and International Flavors.
Diversification Opportunities for Albemarle Corp and International Flavors
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Albemarle and International is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Albemarle Corp 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 Albemarle Corp are associated (or correlated) with International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and International Flavors go up and down completely randomly.
Pair Corralation between Albemarle Corp and International Flavors
Considering the 90-day investment horizon Albemarle Corp is expected to under-perform the International Flavors. In addition to that, Albemarle Corp is 2.28 times more volatile than International Flavors Fragrances. It trades about -0.02 of its total potential returns per unit of risk. International Flavors Fragrances is currently generating about -0.02 per unit of volatility. If you would invest 9,437 in International Flavors Fragrances on August 24, 2024 and sell it today you would lose (459.00) from holding International Flavors Fragrances or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle Corp vs. International Flavors Fragranc
Performance |
| Timeline |
| Albemarle Corp |
| International Flavors |
Albemarle Corp and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle Corp and International Flavors
The main advantage of trading using opposite Albemarle Corp and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle Corp position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| Albemarle Corp vs. Linde plc Ordinary | Albemarle Corp vs. Air Products and | Albemarle Corp vs. Dupont De Nemours | Albemarle Corp vs. Sociedad Quimica y |
| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors vs. Air Products and |
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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