Correlation Between INTERNATIONAL and Moelis

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

Diversification Opportunities for INTERNATIONAL and Moelis

-0.1

Correlation Coefficient

INTERNATIONAL  Moelis

Good diversification

The 3 months correlation between INTERNATIONAL and Moelis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL FLAVORS FRAGRANC and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis 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 Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of INTERNATIONAL i.e., INTERNATIONAL and Moelis go up and down completely randomly.

Pair Corralation between INTERNATIONAL and Moelis

Assuming the 90 days trading horizon INTERNATIONAL FLAVORS FRAGRANCES is expected to under-perform the Moelis. But the bond apears to be less risky and, when comparing its historical volatility, INTERNATIONAL FLAVORS FRAGRANCES is 1.66 times less risky than Moelis. The bond trades about -0.12 of its potential returns per unit of risk. The Moelis Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,560  in Moelis Co on October 10, 2024 and sell it today you would lose (172.00) from holding Moelis Co or give up 2.28% of portfolio value over 90 days.

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

INTERNATIONAL FLAVORS FRAGRANC  vs.  Moelis Co

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Moelis

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERNATIONAL and Moelis

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

The idea behind INTERNATIONAL FLAVORS FRAGRANCES and Moelis Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.