Correlation Between Dupont De and Home Federal
Can any of the company-specific risk be diversified away by investing in both Dupont De and Home Federal 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 Home Federal 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 Home Federal Bancorp, you can compare the effects of market volatilities on Dupont De and Home Federal 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 Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Home Federal.
Diversification Opportunities for Dupont De and Home Federal
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Home is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp 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 Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Dupont De i.e., Dupont De and Home Federal go up and down completely randomly.
Pair Corralation between Dupont De and Home Federal
Allowing for the 90-day total investment horizon Dupont De is expected to generate 361.74 times less return on investment than Home Federal. But when comparing it to its historical volatility, Dupont De Nemours is 71.95 times less risky than Home Federal. It trades about 0.02 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,102 in Home Federal Bancorp on August 24, 2024 and sell it today you would earn a total of 127.00 from holding Home Federal Bancorp or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.4% |
| Values | Daily Returns |
Dupont De Nemours vs. Home Federal Bancorp
Performance |
| Timeline |
| Dupont De Nemours |
| Home Federal Bancorp |
Dupont De and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Home Federal
The main advantage of trading using opposite Dupont De and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. LyondellBasell Industries NV | Dupont De vs. Air Products and |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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