Correlation Between Dupont De and LENNAR CORP
Can any of the company-specific risk be diversified away by investing in both Dupont De and LENNAR CORP 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 LENNAR CORP 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 LENNAR P B, you can compare the effects of market volatilities on Dupont De and LENNAR CORP 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 LENNAR CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and LENNAR CORP.
Diversification Opportunities for Dupont De and LENNAR CORP
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dupont and LENNAR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and LENNAR P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENNAR CORP 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 LENNAR CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENNAR CORP has no effect on the direction of Dupont De i.e., Dupont De and LENNAR CORP go up and down completely randomly.
Pair Corralation between Dupont De and LENNAR CORP
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the LENNAR CORP. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.63 times less risky than LENNAR CORP. The stock trades about -0.11 of its potential returns per unit of risk. The LENNAR P B is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,951 in LENNAR P B on August 28, 2024 and sell it today you would earn a total of 949.00 from holding LENNAR P B or generate 6.35% 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. LENNAR P B
Performance |
| Timeline |
| Dupont De Nemours |
| LENNAR CORP |
Dupont De and LENNAR CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and LENNAR CORP
The main advantage of trading using opposite Dupont De and LENNAR CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, LENNAR CORP 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 LENNAR CORP will offset losses from the drop in LENNAR CORP'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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