Correlation Between Dupont De and AutoNation
Can any of the company-specific risk be diversified away by investing in both Dupont De and AutoNation 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 AutoNation 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 AutoNation, you can compare the effects of market volatilities on Dupont De and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and AutoNation.
Diversification Opportunities for Dupont De and AutoNation
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and AutoNation is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Dupont De i.e., Dupont De and AutoNation go up and down completely randomly.
Pair Corralation between Dupont De and AutoNation
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the AutoNation. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.29 times less risky than AutoNation. The stock trades about -0.05 of its potential returns per unit of risk. The AutoNation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 16,200 in AutoNation on August 24, 2024 and sell it today you would earn a total of 1,105 from holding AutoNation or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. AutoNation
Performance |
| Timeline |
| Dupont De Nemours |
| AutoNation |
Dupont De and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and AutoNation
The main advantage of trading using opposite Dupont De and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Dupont De vs. Eshallgo Class A | Dupont De vs. Amtech Systems | Dupont De vs. Gold Fields Ltd | Dupont De vs. Aegean Airlines SA |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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