Correlation Between Origin Materials and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Origin Materials and Inter Parfums 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 Origin Materials and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Materials and Inter Parfums, you can compare the effects of market volatilities on Origin Materials and Inter Parfums 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 Origin Materials with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Materials and Inter Parfums.
Diversification Opportunities for Origin Materials and Inter Parfums
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Origin and Inter is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Origin Materials 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 Origin Materials are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Origin Materials i.e., Origin Materials and Inter Parfums go up and down completely randomly.
Pair Corralation between Origin Materials and Inter Parfums
Given the investment horizon of 90 days Origin Materials is expected to under-perform the Inter Parfums. In addition to that, Origin Materials is 1.62 times more volatile than Inter Parfums. It trades about -0.55 of its total potential returns per unit of risk. Inter Parfums is currently generating about 0.25 per unit of volatility. If you would invest 13,039 in Inter Parfums on November 5, 2024 and sell it today you would earn a total of 1,063 from holding Inter Parfums or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Origin Materials vs. Inter Parfums
Performance |
| Timeline |
| Origin Materials |
| Inter Parfums |
Origin Materials and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Materials and Inter Parfums
The main advantage of trading using opposite Origin Materials and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Materials position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Origin Materials vs. Tronox Holdings PLC | Origin Materials vs. Valhi Inc | Origin Materials vs. Lsb Industries | Origin Materials vs. Huntsman |
| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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