Correlation Between Big Tree and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Big Tree and Inter Parfums 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 Big Tree and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Tree Cloud and Inter Parfums, you can compare the effects of market volatilities on Big Tree and Inter Parfums 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 Big Tree with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Tree and Inter Parfums.
Diversification Opportunities for Big Tree and Inter Parfums
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Inter is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Big Tree Cloud and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Big Tree 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 Big Tree Cloud are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Big Tree i.e., Big Tree and Inter Parfums go up and down completely randomly.
Pair Corralation between Big Tree and Inter Parfums
Assuming the 90 days horizon Big Tree Cloud is expected to generate 8.37 times more return on investment than Inter Parfums. However, Big Tree is 8.37 times more volatile than Inter Parfums. It trades about 0.1 of its potential returns per unit of risk. Inter Parfums is currently generating about -0.01 per unit of risk. If you would invest 2.00 in Big Tree Cloud on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Big Tree Cloud or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.28% |
| Values | Daily Returns |
Big Tree Cloud vs. Inter Parfums
Performance |
| Timeline |
| Big Tree Cloud |
| Inter Parfums |
Big Tree and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Tree and Inter Parfums
The main advantage of trading using opposite Big Tree and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Tree position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Big Tree vs. Colgate Palmolive | Big Tree vs. Estee Lauder Companies | Big Tree vs. Procter Gamble | Big Tree vs. United Guardian |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |