Correlation Between Dupont De and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Dupont De and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Dupont De and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and SMA Solar.
Diversification Opportunities for Dupont De and SMA Solar
Significant diversification
The 3 months correlation between Dupont and SMA is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Dupont De i.e., Dupont De and SMA Solar go up and down completely randomly.
Pair Corralation between Dupont De and SMA Solar
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.41 times more return on investment than SMA Solar. However, Dupont De Nemours is 2.42 times less risky than SMA Solar. It trades about 0.06 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.11 per unit of risk. If you would invest 6,818 in Dupont De Nemours on September 1, 2024 and sell it today you would earn a total of 1,541 from holding Dupont De Nemours or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Dupont De Nemours vs. SMA Solar Technology
Performance |
| Timeline |
| Dupont De Nemours |
| SMA Solar Technology |
Dupont De and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and SMA Solar
The main advantage of trading using opposite Dupont De and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Superior Plus Corp | SMA Solar vs. NMI Holdings | SMA Solar vs. Origin Agritech |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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