Correlation Between Dupont De and International Flavors
Can any of the company-specific risk be diversified away by investing in both Dupont De and International Flavors 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 International Flavors 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 International Flavors Fragrances, you can compare the effects of market volatilities on Dupont De and International Flavors 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 International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and International Flavors.
Diversification Opportunities for Dupont De and International Flavors
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and International is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors 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 International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of Dupont De i.e., Dupont De and International Flavors go up and down completely randomly.
Pair Corralation between Dupont De and International Flavors
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.54 times more return on investment than International Flavors. However, Dupont De Nemours is 1.86 times less risky than International Flavors. It trades about 0.03 of its potential returns per unit of risk. International Flavors Fragrances is currently generating about -0.15 per unit of risk. If you would invest 8,327 in Dupont De Nemours on August 31, 2024 and sell it today you would earn a total of 63.00 from holding Dupont De Nemours or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. International Flavors Fragranc
Performance |
| Timeline |
| Dupont De Nemours |
| International Flavors |
Dupont De and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and International Flavors
The main advantage of trading using opposite Dupont De and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Air Products and | Dupont De vs. Linde plc Ordinary | Dupont De vs. Ecolab Inc |
| International Flavors vs. LyondellBasell Industries NV | International Flavors vs. Cabot | International Flavors vs. Westlake Chemical | International Flavors 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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