Correlation Between Dupont De and Aluminum Futures
Can any of the company-specific risk be diversified away by investing in both Dupont De and Aluminum Futures 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 Aluminum Futures 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 Aluminum Futures, you can compare the effects of market volatilities on Dupont De and Aluminum Futures 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 Aluminum Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Aluminum Futures.
Diversification Opportunities for Dupont De and Aluminum Futures
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dupont and Aluminum is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Aluminum Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Futures 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 Aluminum Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Futures has no effect on the direction of Dupont De i.e., Dupont De and Aluminum Futures go up and down completely randomly.
Pair Corralation between Dupont De and Aluminum Futures
Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.01 times less return on investment than Aluminum Futures. But when comparing it to its historical volatility, Dupont De Nemours is 1.26 times less risky than Aluminum Futures. It trades about 0.03 of its potential returns per unit of risk. Aluminum Futures is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 256,050 in Aluminum Futures on September 1, 2024 and sell it today you would earn a total of 4,400 from holding Aluminum Futures or generate 1.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dupont De Nemours vs. Aluminum Futures
Performance |
| Timeline |
| Dupont De Nemours |
| Aluminum Futures |
Dupont De and Aluminum Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Aluminum Futures
The main advantage of trading using opposite Dupont De and Aluminum Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Aluminum Futures 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 Aluminum Futures will offset losses from the drop in Aluminum Futures' long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Aluminum Futures vs. 30 Year Treasury | Aluminum Futures vs. Brent Crude Oil | Aluminum Futures vs. Five Year Treasury Note | Aluminum Futures vs. Soybean Futures |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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