Correlation Between Dupont De and Far Eastern

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

Diversification Opportunities for Dupont De and Far Eastern

0.39

Correlation Coefficient

Dupont De  Far Eastern

Weak diversification

The 3 months correlation between Dupont and Far is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Far Eastern International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern International 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 Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern International has no effect on the direction of Dupont De i.e., Dupont De and Far Eastern go up and down completely randomly.

Pair Corralation between Dupont De and Far Eastern

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.22 times more return on investment than Far Eastern. However, Dupont De is 1.22 times more volatile than Far Eastern International. It trades about 0.04 of its potential returns per unit of risk. Far Eastern International is currently generating about 0.04 per unit of risk. If you would invest  6,649  in Dupont De Nemours on October 27, 2024 and sell it today you would earn a total of  1,087  from holding Dupont De Nemours or generate 16.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.35%
Values	Daily Returns

Dupont De Nemours  vs.  Far Eastern International

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating 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.

Far Eastern International

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Far Eastern International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Far Eastern is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dupont De and Far Eastern

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

The idea behind Dupont De Nemours and Far Eastern International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.