Correlation Between International Flavors and Danimer Scientific
Can any of the company-specific risk be diversified away by investing in both International Flavors and Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific, you can compare the effects of market volatilities on International Flavors and Danimer Scientific 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 Danimer Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Danimer Scientific.
Diversification Opportunities for International Flavors and Danimer Scientific
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Danimer is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Danimer Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danimer Scientific 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 Danimer Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danimer Scientific has no effect on the direction of International Flavors i.e., International Flavors and Danimer Scientific go up and down completely randomly.
Pair Corralation between International Flavors and Danimer Scientific
Considering the 90-day investment horizon International Flavors Fragrances is expected to generate 0.37 times more return on investment than Danimer Scientific. However, International Flavors Fragrances is 2.74 times less risky than Danimer Scientific. It trades about -0.17 of its potential returns per unit of risk. Danimer Scientific is currently generating about -0.58 per unit of risk. If you would invest 10,220 in International Flavors Fragrances on August 27, 2024 and sell it today you would lose (1,139) from holding International Flavors Fragrances or give up 11.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Flavors Fragranc vs. Danimer Scientific
Performance |
| Timeline |
| International Flavors |
| Danimer Scientific |
International Flavors and Danimer Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Flavors and Danimer Scientific
The main advantage of trading using opposite International Flavors and Danimer Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors position performs unexpectedly, Danimer Scientific 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 Danimer Scientific will offset losses from the drop in Danimer Scientific's long position.| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors vs. Air Products and |
| Danimer Scientific vs. LyondellBasell Industries NV | Danimer Scientific vs. International Flavors Fragrances | Danimer Scientific vs. Cabot | Danimer Scientific vs. Westlake Chemical |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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