Correlation Between Livent Corp and Givaudan

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

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

Diversification Opportunities for Livent Corp and Givaudan

0.0

Correlation Coefficient

Livent Corp  Givaudan

Pay attention - limited upside

The 3 months correlation between Livent and Givaudan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Livent Corp and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Livent Corp 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 Livent Corp 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 Livent Corp i.e., Livent Corp and Givaudan go up and down completely randomly.

Pair Corralation between Livent Corp and Givaudan

If you would invest  411,101  in Givaudan SA on December 29, 2024 and sell it today you would lose (1,857) from holding Givaudan SA or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Livent Corp  vs.  Givaudan SA

Livent Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Livent Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Livent Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Givaudan SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Givaudan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Livent Corp and Givaudan

The main advantage of trading using opposite Livent Corp and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livent Corp 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 Livent Corp 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.