Correlation Between Dupont De and Airbus SE

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

Diversification Opportunities for Dupont De and Airbus SE

-0.42

Correlation Coefficient

Dupont De  Airbus SE

Very good diversification

The 3 months correlation between Dupont and Airbus is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Dupont De i.e., Dupont De and Airbus SE go up and down completely randomly.

Pair Corralation between Dupont De and Airbus SE

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Airbus SE. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.4 times less risky than Airbus SE. The stock trades about -0.08 of its potential returns per unit of risk. The Airbus SE is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,460  in Airbus SE on October 26, 2024 and sell it today you would earn a total of  620.00  from holding Airbus SE or generate 17.92% return on investment over 90 days.

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

Dupont De Nemours  vs.  Airbus SE

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.

Airbus SE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Airbus SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Airbus SE

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

The idea behind Dupont De Nemours and Airbus SE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.