Correlation Between Dupont De and International Game

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

Diversification Opportunities for Dupont De and International Game

0.24

Correlation Coefficient

Dupont De  International Game

Modest diversification

The 3 months correlation between Dupont and International is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game 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 International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Dupont De i.e., Dupont De and International Game go up and down completely randomly.

Pair Corralation between Dupont De and International Game

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.86 times more return on investment than International Game. However, Dupont De Nemours is 1.17 times less risky than International Game. It trades about -0.01 of its potential returns per unit of risk. International Game Technology is currently generating about -0.05 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 30, 2024 and sell it today you would lose (154.00) from holding Dupont De Nemours or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Dupont De Nemours  vs.  International Game Technology

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.

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dupont De and International Game

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

The idea behind Dupont De Nemours and International Game Technology 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 Positions Ratings module to 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.