Correlation Between Capricorn Energy and Givaudan
Can any of the company-specific risk be diversified away by investing in both Capricorn Energy 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 Capricorn Energy and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricorn Energy PLC and Givaudan SA, you can compare the effects of market volatilities on Capricorn Energy 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 Capricorn Energy with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and Givaudan.
Diversification Opportunities for Capricorn Energy and Givaudan
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capricorn and Givaudan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Capricorn Energy 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 Capricorn Energy PLC 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 Capricorn Energy i.e., Capricorn Energy and Givaudan go up and down completely randomly.
Pair Corralation between Capricorn Energy and Givaudan
Assuming the 90 days trading horizon Capricorn Energy PLC is expected to generate 3.09 times more return on investment than Givaudan. However, Capricorn Energy is 3.09 times more volatile than Givaudan SA. It trades about 0.31 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.03 per unit of risk. If you would invest 28,550 in Capricorn Energy PLC on October 20, 2024 and sell it today you would earn a total of 4,450 from holding Capricorn Energy PLC or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricorn Energy PLC vs. Givaudan SA
Performance |
| Timeline |
| Capricorn Energy PLC |
| Givaudan SA |
Capricorn Energy and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and Givaudan
The main advantage of trading using opposite Capricorn Energy and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn Energy 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.| Capricorn Energy vs. Zoom Video Communications | Capricorn Energy vs. Enbridge | Capricorn Energy vs. Endo International PLC | Capricorn Energy vs. Somero Enterprise |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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