Correlation Between Dupont De and E Mini
Can any of the company-specific risk be diversified away by investing in both Dupont De and E Mini 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 E Mini 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 E Mini SP 500, you can compare the effects of market volatilities on Dupont De and E Mini 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 E Mini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and E Mini.
Diversification Opportunities for Dupont De and E Mini
Weak diversification
The 3 months correlation between Dupont and ESUSD is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and E Mini SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mini SP 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 E Mini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mini SP has no effect on the direction of Dupont De i.e., Dupont De and E Mini go up and down completely randomly.
Pair Corralation between Dupont De and E Mini
Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.59 times less return on investment than E Mini. In addition to that, Dupont De is 1.53 times more volatile than E Mini SP 500. It trades about 0.03 of its total potential returns per unit of risk. E Mini SP 500 is currently generating about 0.12 per unit of volatility. If you would invest 529,725 in E Mini SP 500 on September 1, 2024 and sell it today you would earn a total of 75,425 from holding E Mini SP 500 or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.18% |
| Values | Daily Returns |
Dupont De Nemours vs. E Mini SP 500
Performance |
| Timeline |
| Dupont De Nemours |
| E Mini SP |
Dupont De and E Mini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and E Mini
The main advantage of trading using opposite Dupont De and E Mini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, E Mini 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 E Mini will offset losses from the drop in E Mini's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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