Correlation Between International Flavors and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both International Flavors and LyondellBasell Industries 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 LyondellBasell Industries 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 LyondellBasell Industries NV, you can compare the effects of market volatilities on International Flavors and LyondellBasell Industries 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 LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and LyondellBasell Industries.
Diversification Opportunities for International Flavors and LyondellBasell Industries
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and LyondellBasell is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries 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 LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of International Flavors i.e., International Flavors and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between International Flavors and LyondellBasell Industries
Considering the 90-day investment horizon International Flavors Fragrances is expected to generate 1.31 times more return on investment than LyondellBasell Industries. However, International Flavors is 1.31 times more volatile than LyondellBasell Industries NV. It trades about -0.02 of its potential returns per unit of risk. LyondellBasell Industries NV is currently generating about -0.09 per unit of risk. If you would invest 9,437 in International Flavors Fragrances on August 24, 2024 and sell it today you would lose (459.00) from holding International Flavors Fragrances or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Flavors Fragranc vs. LyondellBasell Industries NV
Performance |
| Timeline |
| International Flavors |
| LyondellBasell Industries |
International Flavors and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Flavors and LyondellBasell Industries
The main advantage of trading using opposite International Flavors and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Flavors position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' long position.| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors vs. Air Products and |
| LyondellBasell Industries vs. International Flavors Fragrances | LyondellBasell Industries vs. Cabot | LyondellBasell Industries vs. Westlake Chemical | LyondellBasell Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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