Correlation Between Dupont De and LumenRadio
Can any of the company-specific risk be diversified away by investing in both Dupont De and LumenRadio 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 LumenRadio 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 LumenRadio AB, you can compare the effects of market volatilities on Dupont De and LumenRadio 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 LumenRadio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and LumenRadio.
Diversification Opportunities for Dupont De and LumenRadio
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dupont and LumenRadio is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and LumenRadio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LumenRadio AB 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 LumenRadio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LumenRadio AB has no effect on the direction of Dupont De i.e., Dupont De and LumenRadio go up and down completely randomly.
Pair Corralation between Dupont De and LumenRadio
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.56 times more return on investment than LumenRadio. However, Dupont De Nemours is 1.77 times less risky than LumenRadio. It trades about 0.03 of its potential returns per unit of risk. LumenRadio AB is currently generating about 0.01 per unit of risk. If you would invest 6,844 in Dupont De Nemours on November 28, 2024 and sell it today you would earn a total of 1,338 from holding Dupont De Nemours or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. LumenRadio AB
Performance |
| Timeline |
| Dupont De Nemours |
| LumenRadio AB |
Dupont De and LumenRadio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and LumenRadio
The main advantage of trading using opposite Dupont De and LumenRadio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, LumenRadio 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 LumenRadio will offset losses from the drop in LumenRadio's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| LumenRadio vs. Scandic Hotels Group | LumenRadio vs. Redsense Medical AB | LumenRadio vs. Lundin Mining | LumenRadio vs. Neola Medical AB |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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