Correlation Between Chemours and EI Du

Can any of the company-specific risk be diversified away by investing in both Chemours and EI Du 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 Chemours and EI Du into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chemours Co and EI du Pont, you can compare the effects of market volatilities on Chemours and EI Du 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 Chemours with a short position of EI Du. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and EI Du.

Diversification Opportunities for Chemours and EI Du

0.37

Correlation Coefficient

Chemours  EI Du

Weak diversification

The 3 months correlation between Chemours and CTA-P-A is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont and Chemours 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 Chemours Co are associated (or correlated) with EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Chemours i.e., Chemours and EI Du go up and down completely randomly.

Pair Corralation between Chemours and EI Du

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the EI Du. In addition to that, Chemours is 2.05 times more volatile than EI du Pont. It trades about -0.54 of its total potential returns per unit of risk. EI du Pont is currently generating about -0.24 per unit of volatility. If you would invest  5,760  in EI du Pont on October 9, 2024 and sell it today you would lose (227.00) from holding EI du Pont or give up 3.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Chemours Co  vs.  EI du Pont

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chemours and EI Du

The main advantage of trading using opposite Chemours and EI Du positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours position performs unexpectedly, EI Du 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 EI Du will offset losses from the drop in EI Du's long position.

The idea behind Chemours Co and EI du Pont pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.