Correlation Between Dupont De and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Dupont De and Sterling Capital 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 Sterling Capital 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 Sterling Capital Ultra, you can compare the effects of market volatilities on Dupont De and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Sterling Capital.
Diversification Opportunities for Dupont De and Sterling Capital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and Sterling is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Sterling Capital Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Ultra 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Ultra has no effect on the direction of Dupont De i.e., Dupont De and Sterling Capital go up and down completely randomly.
Pair Corralation between Dupont De and Sterling Capital
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 17.18 times more return on investment than Sterling Capital. However, Dupont De is 17.18 times more volatile than Sterling Capital Ultra. It trades about 0.03 of its potential returns per unit of risk. Sterling Capital Ultra is currently generating about 0.24 per unit of risk. If you would invest 7,318 in Dupont De Nemours on September 1, 2024 and sell it today you would earn a total of 1,041 from holding Dupont De Nemours or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Dupont De Nemours vs. Sterling Capital Ultra
Performance |
| Timeline |
| Dupont De Nemours |
| Sterling Capital Ultra |
Dupont De and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Sterling Capital
The main advantage of trading using opposite Dupont De and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Intermediate |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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