Correlation Between Dupont De and American Funds
Can any of the company-specific risk be diversified away by investing in both Dupont De and American Funds 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 American Funds 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 American Funds 2060, you can compare the effects of market volatilities on Dupont De and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and American Funds.
Diversification Opportunities for Dupont De and American Funds
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dupont and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and American Funds 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2060 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2060 has no effect on the direction of Dupont De i.e., Dupont De and American Funds go up and down completely randomly.
Pair Corralation between Dupont De and American Funds
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.86 times less return on investment than American Funds. In addition to that, Dupont De is 1.76 times more volatile than American Funds 2060. It trades about 0.03 of its total potential returns per unit of risk. American Funds 2060 is currently generating about 0.1 per unit of volatility. If you would invest 1,707 in American Funds 2060 on September 1, 2024 and sell it today you would earn a total of 165.00 from holding American Funds 2060 or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dupont De Nemours vs. American Funds 2060
Performance |
| Timeline |
| Dupont De Nemours |
| American Funds 2060 |
Dupont De and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and American Funds
The main advantage of trading using opposite Dupont De and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| American Funds vs. American Funds 2040 | American Funds vs. American Funds 2055 | American Funds vs. American Funds 2045 | American Funds vs. American Funds 2035 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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