Correlation Between Olin and International Flavors
Can any of the company-specific risk be diversified away by investing in both Olin 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 Olin and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and International Flavors Fragrances, you can compare the effects of market volatilities on Olin 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 Olin with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and International Flavors.
Diversification Opportunities for Olin and International Flavors
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Olin and International is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Olin 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 Olin 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 Olin Corporation 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 Olin i.e., Olin and International Flavors go up and down completely randomly.
Pair Corralation between Olin and International Flavors
Considering the 90-day investment horizon Olin Corporation is expected to under-perform the International Flavors. In addition to that, Olin is 1.06 times more volatile than International Flavors Fragrances. It trades about -0.01 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olin Corp. vs. International Flavors Fragranc
Performance |
| Timeline |
| Olin |
| International Flavors |
Olin and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and International Flavors
The main advantage of trading using opposite Olin and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin 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.| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |