Correlation Between Dole PLC and Inter Parfums

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

By analyzing existing cross correlation between Dole PLC and Inter Parfums, you can compare the effects of market volatilities on Dole PLC 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 Dole PLC with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dole PLC and Inter Parfums.

Diversification Opportunities for Dole PLC and Inter Parfums

-0.24

Correlation Coefficient

Dole PLC  Inter Parfums

Very good diversification

The 3 months correlation between Dole and Inter is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Dole PLC 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 Dole PLC 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 Dole PLC i.e., Dole PLC and Inter Parfums go up and down completely randomly.

Pair Corralation between Dole PLC and Inter Parfums

Given the investment horizon of 90 days Dole PLC is expected to generate 0.78 times more return on investment than Inter Parfums. However, Dole PLC is 1.29 times less risky than Inter Parfums. It trades about 0.03 of its potential returns per unit of risk. Inter Parfums is currently generating about -0.06 per unit of risk. If you would invest  1,347  in Dole PLC on December 27, 2024 and sell it today you would earn a total of  34.00  from holding Dole PLC or generate 2.52% return on investment over 90 days.

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

Dole PLC  vs.  Inter Parfums

Dole PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Dole PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Inter Parfums

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inter Parfums has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Dole PLC and Inter Parfums

The main advantage of trading using opposite Dole PLC and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dole PLC 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.

The idea behind Dole PLC and Inter Parfums 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.