Correlation Between EI Du and Belden

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

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

Diversification Opportunities for EI Du and Belden

-0.46

Correlation Coefficient

EI Du  Belden

Very good diversification

The 3 months correlation between CTA-P-A and Belden is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding EI du Pont and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc and EI Du 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 EI du Pont are associated (or correlated) with Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of EI Du i.e., EI Du and Belden go up and down completely randomly.

Pair Corralation between EI Du and Belden

Assuming the 90 days trading horizon EI du Pont is expected to generate 0.73 times more return on investment than Belden. However, EI du Pont is 1.36 times less risky than Belden. It trades about 0.05 of its potential returns per unit of risk. Belden Inc is currently generating about -0.09 per unit of risk. If you would invest  5,610  in EI du Pont on December 21, 2024 and sell it today you would earn a total of  138.00  from holding EI du Pont or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	70.0%
Values	Daily Returns

EI du Pont  vs.  Belden Inc

EI du Pont

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EI du Pont are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EI Du is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Belden Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belden Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with EI Du and Belden

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

The idea behind EI du Pont and Belden Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.