Correlation Between Element Solutions and International Flavors
Can any of the company-specific risk be diversified away by investing in both Element Solutions 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 Element Solutions and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and International Flavors Fragrances, you can compare the effects of market volatilities on Element Solutions 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 Element Solutions with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and International Flavors.
Diversification Opportunities for Element Solutions and International Flavors
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Element and International is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Element Solutions 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 Element Solutions 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 Element Solutions i.e., Element Solutions and International Flavors go up and down completely randomly.
Pair Corralation between Element Solutions and International Flavors
Considering the 90-day investment horizon Element Solutions is expected to generate 0.85 times more return on investment than International Flavors. However, Element Solutions is 1.17 times less risky than International Flavors. It trades about 0.06 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about 0.0 per unit of risk. If you would invest 1,879 in Element Solutions on August 24, 2024 and sell it today you would earn a total of 1,025 from holding Element Solutions or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. International Flavors Fragranc
Performance |
| Timeline |
| Element Solutions |
| International Flavors |
Element Solutions and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and International Flavors
The main advantage of trading using opposite Element Solutions and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions 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.| Element Solutions vs. Eshallgo Class A | Element Solutions vs. Amtech Systems | Element Solutions vs. Gold Fields Ltd | Element Solutions vs. Aegean Airlines SA |
| International Flavors vs. Eshallgo Class A | International Flavors vs. Amtech Systems | International Flavors vs. Gold Fields Ltd | International Flavors vs. Aegean Airlines SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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