Correlation Between INTERNATIONAL and Cadence Bancorp

Can any of the company-specific risk be diversified away by investing in both INTERNATIONAL and Cadence Bancorp 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 and Cadence Bancorp 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 Cadence Bancorp, you can compare the effects of market volatilities on INTERNATIONAL and Cadence Bancorp 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 with a short position of Cadence Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL and Cadence Bancorp.

Diversification Opportunities for INTERNATIONAL and Cadence Bancorp

0.38

Correlation Coefficient

INTERNATIONAL  Cadence Bancorp

Weak diversification

The 3 months correlation between INTERNATIONAL and Cadence is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL FLAVORS FRAGRANC and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bancorp and INTERNATIONAL 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 Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of INTERNATIONAL i.e., INTERNATIONAL and Cadence Bancorp go up and down completely randomly.

Pair Corralation between INTERNATIONAL and Cadence Bancorp

Assuming the 90 days trading horizon INTERNATIONAL is expected to generate 1.49 times less return on investment than Cadence Bancorp. In addition to that, INTERNATIONAL is 1.08 times more volatile than Cadence Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Cadence Bancorp is currently generating about 0.11 per unit of volatility. If you would invest  3,477  in Cadence Bancorp on October 25, 2024 and sell it today you would earn a total of  114.00  from holding Cadence Bancorp or generate 3.28% return on investment over 90 days.

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

INTERNATIONAL FLAVORS FRAGRANC  vs.  Cadence Bancorp

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, INTERNATIONAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Cadence Bancorp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Cadence Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INTERNATIONAL and Cadence Bancorp

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

The idea behind INTERNATIONAL FLAVORS FRAGRANCES and Cadence Bancorp 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.