Correlation Between Dupont De and Exxon
Can any of the company-specific risk be diversified away by investing in both Dupont De and Exxon 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 Exxon 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 EXXON MOBIL CDR, you can compare the effects of market volatilities on Dupont De and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Exxon.
Diversification Opportunities for Dupont De and Exxon
Very weak diversification
The 3 months correlation between Dupont and Exxon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Dupont De i.e., Dupont De and Exxon go up and down completely randomly.
Pair Corralation between Dupont De and Exxon
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Exxon. In addition to that, Dupont De is 1.07 times more volatile than EXXON MOBIL CDR. It trades about -0.11 of its total potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.05 per unit of volatility. If you would invest 2,157 in EXXON MOBIL CDR on August 28, 2024 and sell it today you would earn a total of 50.00 from holding EXXON MOBIL CDR or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Dupont De Nemours vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Dupont De Nemours |
| EXXON MOBIL CDR |
Dupont De and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Exxon
The main advantage of trading using opposite Dupont De and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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