Correlation Between Dupont De and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Dupont De and SPDR SSGA 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 SPDR SSGA 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 SPDR SSGA Sector, you can compare the effects of market volatilities on Dupont De and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and SPDR SSGA.
Diversification Opportunities for Dupont De and SPDR SSGA
Weak diversification
The 3 months correlation between Dupont and SPDR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Dupont De i.e., Dupont De and SPDR SSGA go up and down completely randomly.
Pair Corralation between Dupont De and SPDR SSGA
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.29 times less return on investment than SPDR SSGA. In addition to that, Dupont De is 1.87 times more volatile than SPDR SSGA Sector. It trades about 0.03 of its total potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.08 per unit of volatility. If you would invest 3,900 in SPDR SSGA Sector on August 27, 2024 and sell it today you would earn a total of 1,538 from holding SPDR SSGA Sector or generate 39.44% 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. SPDR SSGA Sector
Performance |
| Timeline |
| Dupont De Nemours |
| SPDR SSGA Sector |
Dupont De and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and SPDR SSGA
The main advantage of trading using opposite Dupont De and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| SPDR SSGA vs. Morningstar Unconstrained Allocation | SPDR SSGA vs. High Yield Municipal Fund | SPDR SSGA vs. Via Renewables | SPDR SSGA vs. Knife River |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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