Correlation Between Dupont De and American Beacon
Can any of the company-specific risk be diversified away by investing in both Dupont De and American Beacon 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 American Beacon 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 American Beacon Ark, you can compare the effects of market volatilities on Dupont De and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and American Beacon.
Diversification Opportunities for Dupont De and American Beacon
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dupont and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ark has no effect on the direction of Dupont De i.e., Dupont De and American Beacon go up and down completely randomly.
Pair Corralation between Dupont De and American Beacon
Allowing for the 90-day total investment horizon Dupont De is expected to generate 21.4 times less return on investment than American Beacon. But when comparing it to its historical volatility, Dupont De Nemours is 1.91 times less risky than American Beacon. It trades about 0.02 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,244 in American Beacon Ark on August 30, 2024 and sell it today you would earn a total of 220.00 from holding American Beacon Ark or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. American Beacon Ark
Performance |
| Timeline |
| Dupont De Nemours |
| American Beacon Ark |
Dupont De and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and American Beacon
The main advantage of trading using opposite Dupont De and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| American Beacon vs. Amer Beacon Ark | American Beacon vs. Amer Beacon Ark | American Beacon vs. American Beacon Large | American Beacon vs. American Beacon Ark |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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