Correlation Between Dupont De and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Dupont De and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on Dupont De and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Rheinmetall.
Diversification Opportunities for Dupont De and Rheinmetall
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dupont and Rheinmetall is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Dupont De i.e., Dupont De and Rheinmetall go up and down completely randomly.
Pair Corralation between Dupont De and Rheinmetall
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Rheinmetall. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.64 times less risky than Rheinmetall. The stock trades about -0.01 of its potential returns per unit of risk. The Rheinmetall AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 49,600 in Rheinmetall AG on October 25, 2024 and sell it today you would earn a total of 22,420 from holding Rheinmetall AG or generate 45.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Dupont De Nemours vs. Rheinmetall AG
Performance |
| Timeline |
| Dupont De Nemours |
| Rheinmetall AG |
Dupont De and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Rheinmetall
The main advantage of trading using opposite Dupont De and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| Rheinmetall vs. United Airlines Holdings | Rheinmetall vs. International Consolidated Airlines | Rheinmetall vs. Pets at Home | Rheinmetall vs. Eastman Chemical Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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