Correlation Between Givaudan and Air Products
Can any of the company-specific risk be diversified away by investing in both Givaudan and Air Products 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 Givaudan and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Air Products and, you can compare the effects of market volatilities on Givaudan and Air Products 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 Givaudan with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Air Products.
Diversification Opportunities for Givaudan and Air Products
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Givaudan and Air is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products and Givaudan 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 Givaudan SA are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Givaudan i.e., Givaudan and Air Products go up and down completely randomly.
Pair Corralation between Givaudan and Air Products
Assuming the 90 days horizon Givaudan SA is expected to generate 1.58 times more return on investment than Air Products. However, Givaudan is 1.58 times more volatile than Air Products and. It trades about 0.0 of its potential returns per unit of risk. Air Products and is currently generating about -0.21 per unit of risk. If you would invest 422,086 in Givaudan SA on December 6, 2024 and sell it today you would lose (1,750) from holding Givaudan SA or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Givaudan SA vs. Air Products and
Performance |
| Timeline |
| Givaudan SA |
| Air Products |
Givaudan and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Air Products
The main advantage of trading using opposite Givaudan and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Givaudan vs. Sika AG ADR | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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