Correlation Between Inter Parfums and Global Lights
Can any of the company-specific risk be diversified away by investing in both Inter Parfums and Global Lights 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 Inter Parfums and Global Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and Global Lights Acquisition, you can compare the effects of market volatilities on Inter Parfums and Global Lights 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 Inter Parfums with a short position of Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Global Lights.
Diversification Opportunities for Inter Parfums and Global Lights
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inter and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition and Inter Parfums 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 Inter Parfums are associated (or correlated) with Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of Inter Parfums i.e., Inter Parfums and Global Lights go up and down completely randomly.
Pair Corralation between Inter Parfums and Global Lights
Given the investment horizon of 90 days Inter Parfums is expected to generate 5.58 times more return on investment than Global Lights. However, Inter Parfums is 5.58 times more volatile than Global Lights Acquisition. It trades about 0.06 of its potential returns per unit of risk. Global Lights Acquisition is currently generating about 0.07 per unit of risk. If you would invest 11,938 in Inter Parfums on September 2, 2024 and sell it today you would earn a total of 1,828 from holding Inter Parfums or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Parfums vs. Global Lights Acquisition
Performance |
| Timeline |
| Inter Parfums |
| Global Lights Acquisition |
Inter Parfums and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Parfums and Global Lights
The main advantage of trading using opposite Inter Parfums and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.| Inter Parfums vs. Seneca Foods Corp | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Central Garden Pet | Inter Parfums vs. Lifeway Foods |
| Global Lights vs. Asbury Automotive Group | Global Lights vs. SBM Offshore NV | Global Lights vs. The Gap, | Global Lights vs. Kite Realty Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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