Correlation Between Dupont De and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Dupont De and BNP Paribas 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 BNP Paribas 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 BNP Paribas Easy, you can compare the effects of market volatilities on Dupont De and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and BNP Paribas.
Diversification Opportunities for Dupont De and BNP Paribas
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dupont and BNP is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Dupont De i.e., Dupont De and BNP Paribas go up and down completely randomly.
Pair Corralation between Dupont De and BNP Paribas
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 2.14 times more return on investment than BNP Paribas. However, Dupont De is 2.14 times more volatile than BNP Paribas Easy. It trades about 0.03 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.06 per unit of risk. If you would invest 8,212 in Dupont De Nemours on September 2, 2024 and sell it today you would earn a total of 147.00 from holding Dupont De Nemours or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
Dupont De Nemours vs. BNP Paribas Easy
Performance |
| Timeline |
| Dupont De Nemours |
| BNP Paribas Easy |
Dupont De and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and BNP Paribas
The main advantage of trading using opposite Dupont De and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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