Correlation Between Livent Corp and International Flavors
Can any of the company-specific risk be diversified away by investing in both Livent Corp and International Flavors 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 Livent Corp and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livent Corp and International Flavors Fragrances, you can compare the effects of market volatilities on Livent Corp and International Flavors 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 Livent Corp with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livent Corp and International Flavors.
Diversification Opportunities for Livent Corp and International Flavors
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Livent and International is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Livent Corp and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Livent Corp 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 Livent Corp are associated (or correlated) with International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Livent Corp i.e., Livent Corp and International Flavors go up and down completely randomly.
Pair Corralation between Livent Corp and International Flavors
Given the investment horizon of 90 days Livent Corp is expected to under-perform the International Flavors. In addition to that, Livent Corp is 1.26 times more volatile than International Flavors Fragrances. It trades about -0.05 of its total potential returns per unit of risk. International Flavors Fragrances is currently generating about 0.04 per unit of volatility. If you would invest 7,481 in International Flavors Fragrances on September 1, 2024 and sell it today you would earn a total of 1,655 from holding International Flavors Fragrances or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.33% |
| Values | Daily Returns |
Livent Corp vs. International Flavors Fragranc
Performance |
| Timeline |
| Livent Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| International Flavors |
Livent Corp and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livent Corp and International Flavors
The main advantage of trading using opposite Livent Corp and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livent Corp position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| Livent Corp vs. Albemarle Corp | Livent Corp vs. Linde plc Ordinary | Livent Corp vs. Air Products and | Livent Corp vs. Dupont De Nemours |
| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |