Correlation Between Dupont De and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Dupont De and ABSA Bank 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 ABSA Bank 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 ABSA Bank Limited, you can compare the effects of market volatilities on Dupont De and ABSA Bank 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 ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and ABSA Bank.
Diversification Opportunities for Dupont De and ABSA Bank
Weak diversification
The 3 months correlation between Dupont and ABSA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited 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 ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Dupont De i.e., Dupont De and ABSA Bank go up and down completely randomly.
Pair Corralation between Dupont De and ABSA Bank
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.48 times more return on investment than ABSA Bank. However, Dupont De is 1.48 times more volatile than ABSA Bank Limited. It trades about 0.05 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.07 per unit of risk. If you would invest 6,989 in Dupont De Nemours on August 24, 2024 and sell it today you would earn a total of 1,286 from holding Dupont De Nemours or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Dupont De Nemours vs. ABSA Bank Limited
Performance |
| Timeline |
| Dupont De Nemours |
| ABSA Bank Limited |
Dupont De and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and ABSA Bank
The main advantage of trading using opposite Dupont De and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. LyondellBasell Industries NV | Dupont De vs. Air Products and |
| ABSA Bank vs. HomeChoice Investments | ABSA Bank vs. African Media Entertainment | ABSA Bank vs. Reinet Investments SCA | ABSA Bank vs. Capitec Bank Holdings |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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