Correlation Between Stephan and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Stephan 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 Stephan and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Stephan Co and Inter Parfums, you can compare the effects of market volatilities on Stephan 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 Stephan with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stephan and Inter Parfums.
Diversification Opportunities for Stephan and Inter Parfums
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stephan and Inter is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Stephan Co and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Stephan 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 The Stephan Co 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 Stephan i.e., Stephan and Inter Parfums go up and down completely randomly.
Pair Corralation between Stephan and Inter Parfums
If you would invest 11,913 in Inter Parfums on September 16, 2024 and sell it today you would earn a total of 1,771 from holding Inter Parfums or generate 14.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 1.54% |
Values | Daily Returns |
The Stephan Co vs. Inter Parfums
Performance |
Timeline |
The Stephan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Inter Parfums |
Stephan and Inter Parfums Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stephan and Inter Parfums
The main advantage of trading using opposite Stephan and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stephan 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.Stephan vs. LOreal Co ADR | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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