Correlation Between Dupont De and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Dupont De and Ciena Corp 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 Ciena Corp 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 Ciena Corp, you can compare the effects of market volatilities on Dupont De and Ciena Corp 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 Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Ciena Corp.
Diversification Opportunities for Dupont De and Ciena Corp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dupont and Ciena is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp 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 Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Dupont De i.e., Dupont De and Ciena Corp go up and down completely randomly.
Pair Corralation between Dupont De and Ciena Corp
Allowing for the 90-day total investment horizon Dupont De is expected to generate 10.89 times less return on investment than Ciena Corp. But when comparing it to its historical volatility, Dupont De Nemours is 1.31 times less risky than Ciena Corp. It trades about 0.03 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 6,409 in Ciena Corp on August 27, 2024 and sell it today you would earn a total of 609.00 from holding Ciena Corp or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Ciena Corp
Performance |
| Timeline |
| Dupont De Nemours |
| Ciena Corp |
Dupont De and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Ciena Corp
The main advantage of trading using opposite Dupont De and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Ciena Corp vs. Ichor Holdings | Ciena Corp vs. Fabrinet | Ciena Corp vs. Hello Group | Ciena Corp vs. Ultra Clean 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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