Correlation Between Dupont De and Lotte Energy
Can any of the company-specific risk be diversified away by investing in both Dupont De and Lotte 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 Lotte 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 Lotte Energy Materials, you can compare the effects of market volatilities on Dupont De and Lotte 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 Lotte Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Lotte Energy.
Diversification Opportunities for Dupont De and Lotte Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dupont and Lotte is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Lotte Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Energy Materials 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 Lotte Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Energy Materials has no effect on the direction of Dupont De i.e., Dupont De and Lotte Energy go up and down completely randomly.
Pair Corralation between Dupont De and Lotte Energy
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.48 times more return on investment than Lotte Energy. However, Dupont De Nemours is 2.1 times less risky than Lotte Energy. It trades about 0.03 of its potential returns per unit of risk. Lotte Energy Materials is currently generating about -0.07 per unit of risk. If you would invest 7,242 in Dupont De Nemours on September 10, 2024 and sell it today you would earn a total of 1,040 from holding Dupont De Nemours or generate 14.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 96.6% |
Values | Daily Returns |
Dupont De Nemours vs. Lotte Energy Materials
Performance |
Timeline |
Dupont De Nemours |
Lotte Energy Materials |
Dupont De and Lotte Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dupont De and Lotte Energy
The main advantage of trading using opposite Dupont De and Lotte Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Lotte 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 Lotte Energy will offset losses from the drop in Lotte Energy's long position.Dupont De vs. Cherry Hill Mortgage | Dupont De vs. TIM Participacoes SA | Dupont De vs. Ladder Capital Corp | Dupont De vs. Merck Company |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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