Correlation Between Barry Callebaut and Givaudan

Can any of the company-specific risk be diversified away by investing in both Barry Callebaut and Givaudan 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 Barry Callebaut and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barry Callebaut AG and Givaudan SA, you can compare the effects of market volatilities on Barry Callebaut and Givaudan 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 Barry Callebaut with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barry Callebaut and Givaudan.

Diversification Opportunities for Barry Callebaut and Givaudan

0.77

Correlation Coefficient

Barry Callebaut  Givaudan

Poor diversification

The 3 months correlation between Barry and Givaudan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Barry Callebaut AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Barry Callebaut 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 Barry Callebaut AG are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Barry Callebaut i.e., Barry Callebaut and Givaudan go up and down completely randomly.

Pair Corralation between Barry Callebaut and Givaudan

Assuming the 90 days trading horizon Barry Callebaut AG is expected to under-perform the Givaudan. In addition to that, Barry Callebaut is 1.55 times more volatile than Givaudan SA. It trades about -0.11 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.17 per unit of volatility. If you would invest  455,700  in Givaudan SA on September 14, 2024 and sell it today you would lose (51,600) from holding Givaudan SA or give up 11.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Barry Callebaut AG  vs.  Givaudan SA

Barry Callebaut AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barry Callebaut AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Barry Callebaut and Givaudan

The main advantage of trading using opposite Barry Callebaut and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barry Callebaut position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.

The idea behind Barry Callebaut AG and Givaudan SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.