Correlation Between Inter Parfums and Veru

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

By analyzing existing cross correlation between Inter Parfums and Veru Inc, you can compare the effects of market volatilities on Inter Parfums and Veru 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 Veru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Veru.

Diversification Opportunities for Inter Parfums and Veru

-0.67

Correlation Coefficient

Inter Parfums  Veru

Excellent diversification

The 3 months correlation between Inter and Veru is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Veru Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veru Inc 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 Veru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veru Inc has no effect on the direction of Inter Parfums i.e., Inter Parfums and Veru go up and down completely randomly.

Pair Corralation between Inter Parfums and Veru

Given the investment horizon of 90 days Inter Parfums is expected to generate 0.36 times more return on investment than Veru. However, Inter Parfums is 2.78 times less risky than Veru. It trades about -0.21 of its potential returns per unit of risk. Veru Inc is currently generating about -0.71 per unit of risk. If you would invest  11,819  in Inter Parfums on March 20, 2024 and sell it today you would lose (696.00) from holding Inter Parfums or give up 5.89% of portfolio value over 90 days.

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

Inter Parfums  vs.  Veru Inc

Inter Parfums

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inter Parfums has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Veru Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Veru Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veru unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Parfums and Veru

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

The idea behind Inter Parfums and Veru Inc 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.