Correlation Between Dupont De and K2 Gold
Can any of the company-specific risk be diversified away by investing in both Dupont De and K2 Gold 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 K2 Gold 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 K2 Gold, you can compare the effects of market volatilities on Dupont De and K2 Gold 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 K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and K2 Gold.
Diversification Opportunities for Dupont De and K2 Gold
Average diversification
The 3 months correlation between Dupont and KTO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold 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 K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Dupont De i.e., Dupont De and K2 Gold go up and down completely randomly.
Pair Corralation between Dupont De and K2 Gold
Allowing for the 90-day total investment horizon Dupont De is expected to generate 12.8 times less return on investment than K2 Gold. But when comparing it to its historical volatility, Dupont De Nemours is 4.62 times less risky than K2 Gold. It trades about 0.03 of its potential returns per unit of risk. K2 Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in K2 Gold on August 31, 2024 and sell it today you would earn a total of 1.00 from holding K2 Gold or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. K2 Gold
Performance |
| Timeline |
| Dupont De Nemours |
| K2 Gold |
Dupont De and K2 Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and K2 Gold
The main advantage of trading using opposite Dupont De and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, K2 Gold 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 K2 Gold will offset losses from the drop in K2 Gold's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Air Products and | Dupont De vs. Linde plc Ordinary | Dupont De vs. Ecolab Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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