Correlation Between Dupont De and Financial Select
Can any of the company-specific risk be diversified away by investing in both Dupont De and Financial Select 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 Financial Select 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 Financial Select Sector, you can compare the effects of market volatilities on Dupont De and Financial Select 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 Financial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Financial Select.
Diversification Opportunities for Dupont De and Financial Select
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dupont and Financial is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Financial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Select Sector 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 Financial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Select Sector has no effect on the direction of Dupont De i.e., Dupont De and Financial Select go up and down completely randomly.
Pair Corralation between Dupont De and Financial Select
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.61 times less return on investment than Financial Select. In addition to that, Dupont De is 1.65 times more volatile than Financial Select Sector. It trades about 0.03 of its total potential returns per unit of risk. Financial Select Sector is currently generating about 0.09 per unit of volatility. If you would invest 3,349 in Financial Select Sector on August 27, 2024 and sell it today you would earn a total of 1,724 from holding Financial Select Sector or generate 51.48% 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. Financial Select Sector
Performance |
| Timeline |
| Dupont De Nemours |
| Financial Select Sector |
Dupont De and Financial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Financial Select
The main advantage of trading using opposite Dupont De and Financial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Financial Select 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 Financial Select will offset losses from the drop in Financial Select's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Financial Select vs. UBS AG London | Financial Select vs. UBS AG London | Financial Select vs. ETRACS Quarterly Pay | Financial Select vs. ETRACS 2xMonthly Pay |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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