Correlation Between Dupont De and LCX
Can any of the company-specific risk be diversified away by investing in both Dupont De and LCX 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 LCX 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 LCX, you can compare the effects of market volatilities on Dupont De and LCX 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 LCX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and LCX.
Diversification Opportunities for Dupont De and LCX
Modest diversification
The 3 months correlation between Dupont and LCX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and LCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCX 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 LCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCX has no effect on the direction of Dupont De i.e., Dupont De and LCX go up and down completely randomly.
Pair Corralation between Dupont De and LCX
Allowing for the 90-day total investment horizon Dupont De is expected to generate 149.48 times less return on investment than LCX. But when comparing it to its historical volatility, Dupont De Nemours is 11.46 times less risky than LCX. It trades about 0.03 of its potential returns per unit of risk. LCX is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 8.74 in LCX on September 1, 2024 and sell it today you would earn a total of 20.26 from holding LCX or generate 231.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dupont De Nemours vs. LCX
Performance |
| Timeline |
| Dupont De Nemours |
| LCX |
Dupont De and LCX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and LCX
The main advantage of trading using opposite Dupont De and LCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, LCX 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 LCX will offset losses from the drop in LCX's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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