Correlation Between RPM International and International Flavors
Can any of the company-specific risk be diversified away by investing in both RPM International 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 RPM International and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPM International and International Flavors Fragrances, you can compare the effects of market volatilities on RPM International 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 RPM International with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPM International and International Flavors.
Diversification Opportunities for RPM International and International Flavors
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RPM and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding RPM International and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and RPM International 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 RPM International 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 RPM International i.e., RPM International and International Flavors go up and down completely randomly.
Pair Corralation between RPM International and International Flavors
Considering the 90-day investment horizon RPM International is expected to generate 3.27 times less return on investment than International Flavors. In addition to that, RPM International is 1.25 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 0.21 per unit of volatility. If you would invest 8,207 in International Flavors Fragrances on November 9, 2024 and sell it today you would earn a total of 360.00 from holding International Flavors Fragrances or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RPM International vs. International Flavors Fragranc
Performance |
| Timeline |
| RPM International |
| International Flavors |
RPM International and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPM International and International Flavors
The main advantage of trading using opposite RPM International and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPM International 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.| RPM International vs. Innospec | RPM International vs. Minerals Technologies | RPM International vs. Oil Dri | RPM International vs. Quaker Chemical |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |