Correlation Between Dupont De and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both Dupont De and Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan Companies, you can compare the effects of market volatilities on Dupont De and Marsh McLennan 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 Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Marsh McLennan.
Diversification Opportunities for Dupont De and Marsh McLennan
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dupont and Marsh is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies 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 Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of Dupont De i.e., Dupont De and Marsh McLennan go up and down completely randomly.
Pair Corralation between Dupont De and Marsh McLennan
Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.36 times less return on investment than Marsh McLennan. In addition to that, Dupont De is 1.26 times more volatile than Marsh McLennan Companies. It trades about 0.02 of its total potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.05 per unit of volatility. If you would invest 18,380 in Marsh McLennan Companies on October 12, 2024 and sell it today you would earn a total of 1,810 from holding Marsh McLennan Companies or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dupont De Nemours vs. Marsh McLennan Companies
Performance |
| Timeline |
| Dupont De Nemours |
| Marsh McLennan Companies |
Dupont De and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Marsh McLennan
The main advantage of trading using opposite Dupont De and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan's long position.| Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
| Marsh McLennan vs. NH HOTEL GROUP | Marsh McLennan vs. The Hongkong and | Marsh McLennan vs. Thai Beverage Public | Marsh McLennan vs. TYSON FOODS A |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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