Correlation Between Dupont De and Aqua America

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

Diversification Opportunities for Dupont De and Aqua America

0.31

Correlation Coefficient

Dupont De  Aqua America

Weak diversification

The 3 months correlation between Dupont and Aqua is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Dupont De i.e., Dupont De and Aqua America go up and down completely randomly.

Pair Corralation between Dupont De and Aqua America

Allowing for the 90-day total investment horizon Dupont De is expected to generate 4.32 times less return on investment than Aqua America. But when comparing it to its historical volatility, Dupont De Nemours is 1.13 times less risky than Aqua America. It trades about 0.02 of its potential returns per unit of risk. Aqua America is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,418  in Aqua America on December 20, 2024 and sell it today you would earn a total of  204.00  from holding Aqua America or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Aqua America

Dupont De Nemours

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Aqua America

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua America are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Aqua America may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dupont De and Aqua America

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

The idea behind Dupont De Nemours and Aqua America 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.