Correlation Between Air Products and International Flavors
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and International Flavors Fragrances, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and International Flavors.
Diversification Opportunities for Air Products and International Flavors
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and International is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Air Products 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 Air Products and 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 Air Products i.e., Air Products and International Flavors go up and down completely randomly.
Pair Corralation between Air Products and International Flavors
Considering the 90-day investment horizon Air Products and is expected to generate 0.37 times more return on investment than International Flavors. However, Air Products and is 2.69 times less risky than International Flavors. It trades about 0.03 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about -0.21 per unit of risk. If you would invest 32,662 in Air Products and on August 24, 2024 and sell it today you would earn a total of 223.00 from holding Air Products and or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. International Flavors Fragranc
Performance |
| Timeline |
| Air Products |
| International Flavors |
Air Products and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and International Flavors
The main advantage of trading using opposite Air Products and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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