Correlation Between International Biotechnology and Givaudan
Can any of the company-specific risk be diversified away by investing in both International Biotechnology 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 International Biotechnology and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Biotechnology Trust and Givaudan SA, you can compare the effects of market volatilities on International Biotechnology 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 International Biotechnology with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Biotechnology and Givaudan.
Diversification Opportunities for International Biotechnology and Givaudan
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Givaudan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding International Biotechnology Tr and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and International Biotechnology 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 International Biotechnology Trust 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 International Biotechnology i.e., International Biotechnology and Givaudan go up and down completely randomly.
Pair Corralation between International Biotechnology and Givaudan
Assuming the 90 days trading horizon International Biotechnology Trust is expected to generate 1.01 times more return on investment than Givaudan. However, International Biotechnology is 1.01 times more volatile than Givaudan SA. It trades about 0.07 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.03 per unit of risk. If you would invest 68,853 in International Biotechnology Trust on October 11, 2024 and sell it today you would earn a total of 947.00 from holding International Biotechnology Trust or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Biotechnology Tr vs. Givaudan SA
Performance |
| Timeline |
| International Biotechnology |
| Givaudan SA |
International Biotechnology and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Biotechnology and Givaudan
The main advantage of trading using opposite International Biotechnology and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Biotechnology 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.| International Biotechnology vs. Ross Stores | International Biotechnology vs. Prosiebensat 1 Media | International Biotechnology vs. Liberty Media Corp | International Biotechnology vs. Costco Wholesale Corp |
| Givaudan vs. International Biotechnology Trust | Givaudan vs. Liontrust Asset Management | Givaudan vs. Cognizant Technology Solutions | Givaudan vs. Micron Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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