Correlation Between Dupont De and Cathay TAIEX
Can any of the company-specific risk be diversified away by investing in both Dupont De and Cathay TAIEX 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 Dupont De and Cathay TAIEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Cathay TAIEX Daily, you can compare the effects of market volatilities on Dupont De and Cathay TAIEX 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 Dupont De with a short position of Cathay TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Cathay TAIEX.
Diversification Opportunities for Dupont De and Cathay TAIEX
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dupont and Cathay is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Cathay TAIEX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay TAIEX Daily and Dupont De 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 Dupont De Nemours are associated (or correlated) with Cathay TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay TAIEX Daily has no effect on the direction of Dupont De i.e., Dupont De and Cathay TAIEX go up and down completely randomly.
Pair Corralation between Dupont De and Cathay TAIEX
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.22 times more return on investment than Cathay TAIEX. However, Dupont De is 1.22 times more volatile than Cathay TAIEX Daily. It trades about 0.06 of its potential returns per unit of risk. Cathay TAIEX Daily is currently generating about -0.09 per unit of risk. If you would invest 6,818 in Dupont De Nemours on September 1, 2024 and sell it today you would earn a total of 1,541 from holding Dupont De Nemours or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.51% |
| Values | Daily Returns |
Dupont De Nemours vs. Cathay TAIEX Daily
Performance |
| Timeline |
| Dupont De Nemours |
| Cathay TAIEX Daily |
Dupont De and Cathay TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Cathay TAIEX
The main advantage of trading using opposite Dupont De and Cathay TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Cathay TAIEX 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 Cathay TAIEX will offset losses from the drop in Cathay TAIEX's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Cathay TAIEX vs. Cathay TIP TAIEX | Cathay TAIEX vs. Cathay Nasdaq AI | Cathay TAIEX vs. Cathay Dow Jones | Cathay TAIEX vs. Cathay Bloomberg Barclays |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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