Correlation Between Dupont De and MAGNA INTL
Can any of the company-specific risk be diversified away by investing in both Dupont De and MAGNA INTL 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 MAGNA INTL 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 MAGNA INTL, you can compare the effects of market volatilities on Dupont De and MAGNA INTL 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 MAGNA INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and MAGNA INTL.
Diversification Opportunities for Dupont De and MAGNA INTL
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and MAGNA is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and MAGNA INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNA INTL 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 MAGNA INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNA INTL has no effect on the direction of Dupont De i.e., Dupont De and MAGNA INTL go up and down completely randomly.
Pair Corralation between Dupont De and MAGNA INTL
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.08 times less return on investment than MAGNA INTL. But when comparing it to its historical volatility, Dupont De Nemours is 1.27 times less risky than MAGNA INTL. It trades about 0.03 of its potential returns per unit of risk. MAGNA INTL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,063 in MAGNA INTL on September 1, 2024 and sell it today you would earn a total of 164.00 from holding MAGNA INTL or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.18% |
| Values | Daily Returns |
Dupont De Nemours vs. MAGNA INTL
Performance |
| Timeline |
| Dupont De Nemours |
| MAGNA INTL |
Dupont De and MAGNA INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and MAGNA INTL
The main advantage of trading using opposite Dupont De and MAGNA INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, MAGNA INTL 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 MAGNA INTL will offset losses from the drop in MAGNA INTL's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| MAGNA INTL vs. Arrow Electronics | MAGNA INTL vs. Citic Telecom International | MAGNA INTL vs. Nucletron Electronic Aktiengesellschaft | MAGNA INTL vs. ELECTRONIC ARTS |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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