Correlation Between Dupont De and CI Signature

Can any of the company-specific risk be diversified away by investing in both Dupont De and CI Signature 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 CI Signature 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 CI Signature Cat, you can compare the effects of market volatilities on Dupont De and CI Signature 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 CI Signature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and CI Signature.

Diversification Opportunities for Dupont De and CI Signature

-0.38

Correlation Coefficient

Dupont De  CI Signature

Very good diversification

The 3 months correlation between Dupont and 0P0001AAKP is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and CI Signature Cat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Signature Cat 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 CI Signature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Signature Cat has no effect on the direction of Dupont De i.e., Dupont De and CI Signature go up and down completely randomly.

Pair Corralation between Dupont De and CI Signature

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the CI Signature. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.17 times less risky than CI Signature. The stock trades about -0.02 of its potential returns per unit of risk. The CI Signature Cat is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,759  in CI Signature Cat on December 1, 2024 and sell it today you would lose (65.00) from holding CI Signature Cat or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Dupont De Nemours  vs.  CI Signature Cat

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

CI Signature Cat

Risk-Adjusted Performance

Very Weak

Over the last 90 days CI Signature Cat has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CI Signature is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and CI Signature

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

The idea behind Dupont De Nemours and CI Signature Cat 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.