Correlation Between Dupont De and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both Dupont De and Xcel Energy 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 Xcel Energy 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 Xcel Energy, you can compare the effects of market volatilities on Dupont De and Xcel Energy 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 Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Xcel Energy.
Diversification Opportunities for Dupont De and Xcel Energy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and Xcel is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Dupont De i.e., Dupont De and Xcel Energy go up and down completely randomly.
Pair Corralation between Dupont De and Xcel Energy
Allowing for the 90-day total investment horizon Dupont De is expected to generate 11.86 times less return on investment than Xcel Energy. In addition to that, Dupont De is 1.03 times more volatile than Xcel Energy. It trades about 0.03 of its total potential returns per unit of risk. Xcel Energy is currently generating about 0.32 per unit of volatility. If you would invest 6,448 in Xcel Energy on August 27, 2024 and sell it today you would earn a total of 687.00 from holding Xcel Energy or generate 10.65% 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. Xcel Energy
Performance |
| Timeline |
| Dupont De Nemours |
| Xcel Energy |
Dupont De and Xcel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Xcel Energy
The main advantage of trading using opposite Dupont De and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Xcel Energy 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 Xcel Energy will offset losses from the drop in Xcel Energy's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Xcel Energy vs. Alliant Energy Corp | Xcel Energy vs. Entergy | Xcel Energy vs. Pinnacle West Capital | Xcel Energy vs. CMS Energy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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