Correlation Between International Flavors and Dupont De

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

By analyzing existing cross correlation between International Flavors Fragrances and Dupont De Nemours, you can compare the effects of market volatilities on International Flavors and Dupont De 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 International Flavors with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Dupont De.

Diversification Opportunities for International Flavors and Dupont De

0.04

Correlation Coefficient

International Flavors  Dupont De

Significant diversification

The 3 months correlation between International and Dupont is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours and International Flavors 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 International Flavors Fragrances are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of International Flavors i.e., International Flavors and Dupont De go up and down completely randomly.

Pair Corralation between International Flavors and Dupont De

Considering the 90-day investment horizon International Flavors Fragrances is expected to under-perform the Dupont De. But the stock apears to be less risky and, when comparing its historical volatility, International Flavors Fragrances is 1.19 times less risky than Dupont De. The stock trades about -0.1 of its potential returns per unit of risk. The Dupont De Nemours is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  7,557  in Dupont De Nemours on December 29, 2024 and sell it today you would lose (154.00) from holding Dupont De Nemours or give up 2.04% of portfolio value over 90 days.

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

International Flavors Fragranc  vs.  Dupont De Nemours

International Flavors

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Flavors Fragrances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with International Flavors and Dupont De

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

The idea behind International Flavors Fragrances and Dupont De Nemours 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.