Correlation Between Dupont De and Swatch
Can any of the company-specific risk be diversified away by investing in both Dupont De and Swatch 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 Swatch 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 The Swatch Group, you can compare the effects of market volatilities on Dupont De and Swatch 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 Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Swatch.
Diversification Opportunities for Dupont De and Swatch
Poor diversification
The 3 months correlation between Dupont and Swatch is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Dupont De i.e., Dupont De and Swatch go up and down completely randomly.
Pair Corralation between Dupont De and Swatch
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Swatch. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 2.62 times less risky than Swatch. The stock trades about -0.18 of its potential returns per unit of risk. The The Swatch Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 820.00 in The Swatch Group on October 28, 2024 and sell it today you would lose (5.00) from holding The Swatch Group or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.44% |
| Values | Daily Returns |
Dupont De Nemours vs. The Swatch Group
Performance |
| Timeline |
| Dupont De Nemours |
| Swatch Group |
Dupont De and Swatch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Swatch
The main advantage of trading using opposite Dupont De and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Swatch 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 Swatch will offset losses from the drop in Swatch's long position.| Dupont De vs. International Flavors Fragrances | Dupont De vs. Air Products and | Dupont De vs. PPG Industries | Dupont De vs. Linde plc Ordinary |
| Swatch vs. BRIT AMER TOBACCO | Swatch vs. NORTHEAST UTILITIES | Swatch vs. United Utilities Group | Swatch vs. Constellation Software |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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