Correlation Between Dupont De and Wacker Chemie
Can any of the company-specific risk be diversified away by investing in both Dupont De and Wacker Chemie 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 Wacker Chemie 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 Wacker Chemie AG, you can compare the effects of market volatilities on Dupont De and Wacker Chemie 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 Wacker Chemie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Wacker Chemie.
Diversification Opportunities for Dupont De and Wacker Chemie
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dupont and Wacker is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Wacker Chemie AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wacker Chemie AG 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 Wacker Chemie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wacker Chemie AG has no effect on the direction of Dupont De i.e., Dupont De and Wacker Chemie go up and down completely randomly.
Pair Corralation between Dupont De and Wacker Chemie
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.75 times more return on investment than Wacker Chemie. However, Dupont De Nemours is 1.33 times less risky than Wacker Chemie. It trades about 0.02 of its potential returns per unit of risk. Wacker Chemie AG is currently generating about -0.33 per unit of risk. If you would invest 8,344 in Dupont De Nemours on August 30, 2024 and sell it today you would earn a total of 46.00 from holding Dupont De Nemours or generate 0.55% 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. Wacker Chemie AG
Performance |
| Timeline |
| Dupont De Nemours |
| Wacker Chemie AG |
Dupont De and Wacker Chemie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Wacker Chemie
The main advantage of trading using opposite Dupont De and Wacker Chemie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Wacker Chemie 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 Wacker Chemie will offset losses from the drop in Wacker Chemie's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Wacker Chemie vs. Akzo Nobel NV | Wacker Chemie vs. Avoca LLC | Wacker Chemie vs. Arkema SA ADR | Wacker Chemie vs. HUMANA INC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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