Correlation Between Reckitt Benckiser and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Reckitt Benckiser 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 Reckitt Benckiser and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reckitt Benckiser Group and Inter Parfums, you can compare the effects of market volatilities on Reckitt Benckiser 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 Reckitt Benckiser with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reckitt Benckiser and Inter Parfums.
Diversification Opportunities for Reckitt Benckiser and Inter Parfums
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Reckitt and Inter is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Reckitt Benckiser Group and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Reckitt Benckiser 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 Reckitt Benckiser Group 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 Reckitt Benckiser i.e., Reckitt Benckiser and Inter Parfums go up and down completely randomly.
Pair Corralation between Reckitt Benckiser and Inter Parfums
Assuming the 90 days horizon Reckitt Benckiser Group is expected to under-perform the Inter Parfums. In addition to that, Reckitt Benckiser is 1.64 times more volatile than Inter Parfums. It trades about -0.03 of its total potential returns per unit of risk. Inter Parfums is currently generating about 0.27 per unit of volatility. If you would invest 12,441 in Inter Parfums on August 28, 2024 and sell it today you would earn a total of 1,398 from holding Inter Parfums or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reckitt Benckiser Group vs. Inter Parfums
Performance |
| Timeline |
| Reckitt Benckiser |
| Inter Parfums |
Reckitt Benckiser and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reckitt Benckiser and Inter Parfums
The main advantage of trading using opposite Reckitt Benckiser and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reckitt Benckiser 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.| Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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