Correlation Between International Flavors and Hawkins
Can any of the company-specific risk be diversified away by investing in both International Flavors and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on International Flavors and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Hawkins.
Diversification Opportunities for International Flavors and Hawkins
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Hawkins is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of International Flavors i.e., International Flavors and Hawkins go up and down completely randomly.
Pair Corralation between International Flavors and Hawkins
Considering the 90-day investment horizon International Flavors Fragrances is expected to under-perform the Hawkins. But the stock apears to be less risky and, when comparing its historical volatility, International Flavors Fragrances is 4.59 times less risky than Hawkins. The stock trades about -0.42 of its potential returns per unit of risk. The Hawkins is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 13,003 in Hawkins on September 23, 2024 and sell it today you would lose (605.00) from holding Hawkins or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Flavors Fragranc vs. Hawkins
Performance |
| Timeline |
| International Flavors |
| Hawkins |
International Flavors and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Flavors and Hawkins
The main advantage of trading using opposite International Flavors and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors vs. Air Products and |
| Hawkins vs. International Flavors Fragrances | Hawkins vs. Cabot | Hawkins vs. Westlake Chemical | Hawkins vs. Air Products and |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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