Correlation Between Dupont De and Eaton PLC

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dupont De and Eaton PLC 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 Eaton PLC 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 Eaton PLC, you can compare the effects of market volatilities on Dupont De and Eaton PLC 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 Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Eaton PLC.

Diversification Opportunities for Dupont De and Eaton PLC

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Dupont and Eaton is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Dupont De i.e., Dupont De and Eaton PLC go up and down completely randomly.

Pair Corralation between Dupont De and Eaton PLC

Allowing for the 90-day total investment horizon Dupont De is expected to generate 13.48 times less return on investment than Eaton PLC. But when comparing it to its historical volatility, Dupont De Nemours is 1.4 times less risky than Eaton PLC. It trades about 0.03 of its potential returns per unit of risk. Eaton PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  25,591  in Eaton PLC on September 5, 2024 and sell it today you would earn a total of  9,639  from holding Eaton PLC or generate 37.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Dupont De Nemours  vs.  Eaton PLC

 Performance 
       Timeline  
Dupont De Nemours 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.
Eaton PLC 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton PLC are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Eaton PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Dupont De and Eaton PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dupont De and Eaton PLC

The main advantage of trading using opposite Dupont De and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Eaton PLC 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 Eaton PLC will offset losses from the drop in Eaton PLC's long position.
The idea behind Dupont De Nemours and Eaton PLC 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.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance