Correlation Between International Flavors and Air Products
Can any of the company-specific risk be diversified away by investing in both International Flavors 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 International Flavors and Air Products 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 Air Products and, you can compare the effects of market volatilities on International Flavors 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 International Flavors with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Air Products.
Diversification Opportunities for International Flavors and Air Products
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Air is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 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 International Flavors i.e., International Flavors and Air Products go up and down completely randomly.
Pair Corralation between International Flavors and Air Products
Considering the 90-day investment horizon International Flavors is expected to generate 1.76 times less return on investment than Air Products. In addition to that, International Flavors is 1.06 times more volatile than Air Products and. It trades about 0.07 of its total potential returns per unit of risk. Air Products and is currently generating about 0.14 per unit of volatility. If you would invest 22,937 in Air Products and on August 27, 2024 and sell it today you would earn a total of 10,246 from holding Air Products and or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Flavors Fragranc vs. Air Products and
Performance |
| Timeline |
| International Flavors |
| Air Products |
International Flavors and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Flavors and Air Products
The main advantage of trading using opposite International Flavors and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors 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.| International Flavors vs. Minerals Technologies | International Flavors vs. Oil Dri | International Flavors vs. H B Fuller | International Flavors vs. Northern Technologies |
| Air Products vs. PPG Industries | Air Products vs. Ecolab Inc | Air Products vs. Sherwin Williams Co | Air Products vs. LyondellBasell Industries NV |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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