Correlation Between Corteva and E I
Can any of the company-specific risk be diversified away by investing in both Corteva and E I 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 Corteva and E I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corteva and E I du, you can compare the effects of market volatilities on Corteva and E I 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 Corteva with a short position of E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corteva and E I.
Diversification Opportunities for Corteva and E I
Modest diversification
The 3 months correlation between Corteva and CTA-PB is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Corteva and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du and Corteva 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 Corteva are associated (or correlated) with E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of Corteva i.e., Corteva and E I go up and down completely randomly.
Pair Corralation between Corteva and E I
Given the investment horizon of 90 days Corteva is expected to generate 1.92 times more return on investment than E I. However, Corteva is 1.92 times more volatile than E I du. It trades about 0.11 of its potential returns per unit of risk. E I du is currently generating about -0.11 per unit of risk. If you would invest 6,113 in Corteva on August 27, 2024 and sell it today you would earn a total of 300.00 from holding Corteva or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corteva vs. E I du
Performance |
| Timeline |
| Corteva |
| E I du |
Corteva and E I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corteva and E I
The main advantage of trading using opposite Corteva and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corteva position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.| Corteva vs. CF Industries Holdings | Corteva vs. American Vanguard | Corteva vs. Intrepid Potash | Corteva vs. The Mosaic |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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