Correlation Between Inter Parfums and Marex Group

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

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

Diversification Opportunities for Inter Parfums and Marex Group

0.63

Correlation Coefficient

Inter Parfums  Marex Group

Poor diversification

The 3 months correlation between Inter and Marex is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc and Inter Parfums 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 Inter Parfums are associated (or correlated) with Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Inter Parfums i.e., Inter Parfums and Marex Group go up and down completely randomly.

Pair Corralation between Inter Parfums and Marex Group

Given the investment horizon of 90 days Inter Parfums is expected to generate 2.86 times less return on investment than Marex Group. But when comparing it to its historical volatility, Inter Parfums is 1.2 times less risky than Marex Group. It trades about 0.05 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,880  in Marex Group plc on September 4, 2024 and sell it today you would earn a total of  1,020  from holding Marex Group plc or generate 54.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.31%
Values	Daily Returns

Inter Parfums  vs.  Marex Group plc

Inter Parfums

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Inter Parfums reported solid returns over the last few months and may actually be approaching a breakup point.

Marex Group plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Parfums and Marex Group

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

The idea behind Inter Parfums and Marex Group plc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.