Correlation Between Caledonia Investments and Givaudan
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments 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 Caledonia Investments and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Givaudan SA, you can compare the effects of market volatilities on Caledonia Investments 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 Caledonia Investments with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Givaudan.
Diversification Opportunities for Caledonia Investments and Givaudan
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caledonia and Givaudan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments i.e., Caledonia Investments and Givaudan go up and down completely randomly.
Pair Corralation between Caledonia Investments and Givaudan
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 1.21 times more return on investment than Givaudan. However, Caledonia Investments is 1.21 times more volatile than Givaudan SA. It trades about 0.22 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.03 per unit of risk. If you would invest 350,500 in Caledonia Investments on October 20, 2024 and sell it today you would earn a total of 14,500 from holding Caledonia Investments or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Investments vs. Givaudan SA
Performance |
| Timeline |
| Caledonia Investments |
| Givaudan SA |
Caledonia Investments and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Givaudan
The main advantage of trading using opposite Caledonia Investments and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments 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.| Caledonia Investments vs. Bioventix | Caledonia Investments vs. VeriSign | Caledonia Investments vs. Games Workshop Group | Caledonia Investments vs. AJ Bell plc |
| Givaudan vs. Cornish Metals | Givaudan vs. Ebro Foods | Givaudan vs. Sovereign Metals | Givaudan vs. GreenX Metals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |