Correlation Between Dupont De and Xtra Energy
Can any of the company-specific risk be diversified away by investing in both Dupont De and Xtra 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 Xtra 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 Xtra Energy Corp, you can compare the effects of market volatilities on Dupont De and Xtra 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 Xtra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Xtra Energy.
Diversification Opportunities for Dupont De and Xtra Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Xtra is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Xtra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Energy Corp 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 Xtra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Energy Corp has no effect on the direction of Dupont De i.e., Dupont De and Xtra Energy go up and down completely randomly.
Pair Corralation between Dupont De and Xtra Energy
Allowing for the 90-day total investment horizon Dupont De is expected to generate 6.05 times less return on investment than Xtra Energy. But when comparing it to its historical volatility, Dupont De Nemours is 5.22 times less risky than Xtra Energy. It trades about 0.04 of its potential returns per unit of risk. Xtra Energy Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Xtra Energy Corp on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Xtra Energy Corp or generate 21.43% 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. Xtra Energy Corp
Performance |
| Timeline |
| Dupont De Nemours |
| Xtra Energy Corp |
Dupont De and Xtra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Xtra Energy
The main advantage of trading using opposite Dupont De and Xtra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Xtra 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 Xtra Energy will offset losses from the drop in Xtra Energy's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Xtra Energy vs. XCana Petroleum | Xtra Energy vs. New Generation Consumer | Xtra Energy vs. Arsenal Digital Holdings | Xtra Energy vs. UHF Logistics Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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