Correlation Between Orion Engineered and International Flavors
Can any of the company-specific risk be diversified away by investing in both Orion Engineered 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 Orion Engineered and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Engineered Carbons and International Flavors Fragrances, you can compare the effects of market volatilities on Orion Engineered 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 Orion Engineered with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and International Flavors.
Diversification Opportunities for Orion Engineered and International Flavors
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Orion and International is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and Orion Engineered 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 Orion Engineered Carbons 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 Orion Engineered i.e., Orion Engineered and International Flavors go up and down completely randomly.
Pair Corralation between Orion Engineered and International Flavors
Considering the 90-day investment horizon Orion Engineered Carbons is expected to generate 1.7 times more return on investment than International Flavors. However, Orion Engineered is 1.7 times more volatile than International Flavors Fragrances. It trades about -0.07 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about -0.12 per unit of risk. If you would invest 1,732 in Orion Engineered Carbons on October 31, 2024 and sell it today you would lose (304.00) from holding Orion Engineered Carbons or give up 17.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orion Engineered Carbons vs. International Flavors Fragranc
Performance |
| Timeline |
| Orion Engineered Carbons |
| International Flavors |
Orion Engineered and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orion Engineered and International Flavors
The main advantage of trading using opposite Orion Engineered and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered 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.| Orion Engineered vs. Innospec | Orion Engineered vs. H B Fuller | Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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