Correlation Between Dupont De and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both Dupont De and MGP Ingredients 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 MGP Ingredients 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 MGP Ingredients, you can compare the effects of market volatilities on Dupont De and MGP Ingredients 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 MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and MGP Ingredients.
Diversification Opportunities for Dupont De and MGP Ingredients
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dupont and MGP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of Dupont De i.e., Dupont De and MGP Ingredients go up and down completely randomly.
Pair Corralation between Dupont De and MGP Ingredients
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.37 times more return on investment than MGP Ingredients. However, Dupont De Nemours is 2.73 times less risky than MGP Ingredients. It trades about 0.03 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.15 per unit of risk. If you would invest 8,299 in Dupont De Nemours on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Dupont De Nemours or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dupont De Nemours vs. MGP Ingredients
Performance |
| Timeline |
| Dupont De Nemours |
| MGP Ingredients |
Dupont De and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and MGP Ingredients
The main advantage of trading using opposite Dupont De and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| MGP Ingredients vs. ANDREW PELLER LTD | MGP Ingredients vs. NAKED WINES PLC | MGP Ingredients vs. Superior Plus Corp | MGP Ingredients vs. NMI Holdings |
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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