Correlation Between Dupont De and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Dupont De and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on Dupont De and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and CNH Industrial.
Diversification Opportunities for Dupont De and CNH Industrial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dupont and CNH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Dupont De i.e., Dupont De and CNH Industrial go up and down completely randomly.
Pair Corralation between Dupont De and CNH Industrial
Allowing for the 90-day total investment horizon Dupont De is expected to generate 4.9 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, Dupont De Nemours is 1.56 times less risky than CNH Industrial. It trades about 0.13 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 1,080 in CNH Industrial NV on November 4, 2024 and sell it today you would earn a total of 173.00 from holding CNH Industrial NV or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dupont De Nemours vs. CNH Industrial NV
Performance |
| Timeline |
| Dupont De Nemours |
| CNH Industrial NV |
Dupont De and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and CNH Industrial
The main advantage of trading using opposite Dupont De and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| CNH Industrial vs. Federal Agricultural Mortgage | CNH Industrial vs. Penta Ocean Construction Co | CNH Industrial vs. International Consolidated Airlines | CNH Industrial vs. Titan Machinery |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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