Correlation Between Dupont De and ADX

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

Diversification Opportunities for Dupont De and ADX

-0.03

Correlation Coefficient

Dupont De  ADX

Good diversification

The 3 months correlation between Dupont and ADX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX 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 ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Dupont De i.e., Dupont De and ADX go up and down completely randomly.

Pair Corralation between Dupont De and ADX

Allowing for the 90-day total investment horizon Dupont De is expected to generate 10.64 times less return on investment than ADX. But when comparing it to its historical volatility, Dupont De Nemours is 1.92 times less risky than ADX. It trades about 0.09 of its potential returns per unit of risk. ADX is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  16.00  in ADX on September 4, 2024 and sell it today you would earn a total of  6.00  from holding ADX or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Dupont De Nemours  vs.  ADX

Dupont De Nemours

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 3 (%) 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.

ADX

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ADX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and ADX

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

The idea behind Dupont De Nemours and ADX 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.