Correlation Between Dupont De and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Dupont De and Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp, you can compare the effects of market volatilities on Dupont De and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Merchants Bancorp.
Diversification Opportunities for Dupont De and Merchants Bancorp
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Merchants is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Dupont De i.e., Dupont De and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Dupont De and Merchants Bancorp
Allowing for the 90-day total investment horizon Dupont De is expected to generate 5.24 times less return on investment than Merchants Bancorp. In addition to that, Dupont De is 1.89 times more volatile than Merchants Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Merchants Bancorp is currently generating about 0.05 per unit of volatility. If you would invest 2,586 in Merchants Bancorp on August 29, 2024 and sell it today you would earn a total of 22.00 from holding Merchants Bancorp or generate 0.85% 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. Merchants Bancorp
Performance |
| Timeline |
| Dupont De Nemours |
| Merchants Bancorp |
Dupont De and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Merchants Bancorp
The main advantage of trading using opposite Dupont De and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Merchants Bancorp vs. Merchants Bancorp | Merchants Bancorp vs. Midland States Bancorp | Merchants Bancorp vs. Merchants Bancorp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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