Correlation Between International Flavors and Dow Jones
Can any of the company-specific risk be diversified away by investing in both International Flavors and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on International Flavors and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Dow Jones.
Diversification Opportunities for International Flavors and Dow Jones
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Dow is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of International Flavors i.e., International Flavors and Dow Jones go up and down completely randomly.
Pair Corralation between International Flavors and Dow Jones
Assuming the 90 days trading horizon International Flavors is expected to generate 11.29 times less return on investment than Dow Jones. In addition to that, International Flavors is 2.89 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
International Flavors Fragranc vs. Dow Jones Industrial
Performance |
| Timeline |
International Flavors and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
International Flavors Fragrances
Pair trading matchups for International Flavors
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with International Flavors and Dow Jones
The main advantage of trading using opposite International Flavors and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| International Flavors vs. THRACE PLASTICS | International Flavors vs. Tower One Wireless | International Flavors vs. Cogent Communications Holdings | International Flavors vs. SANOK RUBBER ZY |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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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