Correlation Between International Flavors and Albemarle
Can any of the company-specific risk be diversified away by investing in both International Flavors and Albemarle 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 Flavors and Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Flavors Fragrances and Albemarle, you can compare the effects of market volatilities on International Flavors and Albemarle 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 Flavors with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Albemarle.
Diversification Opportunities for International Flavors and Albemarle
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Albemarle is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and International Flavors 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 Flavors Fragrances are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of International Flavors i.e., International Flavors and Albemarle go up and down completely randomly.
Pair Corralation between International Flavors and Albemarle
Assuming the 90 days horizon International Flavors Fragrances is expected to under-perform the Albemarle. But the stock apears to be less risky and, when comparing its historical volatility, International Flavors Fragrances is 1.36 times less risky than Albemarle. The stock trades about -0.08 of its potential returns per unit of risk. The Albemarle is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 8,900 in Albemarle on August 31, 2024 and sell it today you would earn a total of 1,284 from holding Albemarle or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Flavors Fragranc vs. Albemarle
Performance |
| Timeline |
| International Flavors |
| Albemarle |
International Flavors and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Flavors and Albemarle
The main advantage of trading using opposite International Flavors and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| International Flavors vs. Dalata Hotel Group | International Flavors vs. Choice Hotels International | International Flavors vs. CVW CLEANTECH INC | International Flavors vs. ATOSS SOFTWARE |
| Albemarle vs. Micron Technology | Albemarle vs. SPORTING | Albemarle vs. Transportadora de Gas | Albemarle vs. AECOM 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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