Correlation Between Dupont De and Africa Oil
Can any of the company-specific risk be diversified away by investing in both Dupont De and Africa Oil 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 Africa Oil 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 Africa Oil Corp, you can compare the effects of market volatilities on Dupont De and Africa Oil 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 Africa Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Africa Oil.
Diversification Opportunities for Dupont De and Africa Oil
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dupont and Africa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Africa Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Africa Oil Corp 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 Africa Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Africa Oil Corp has no effect on the direction of Dupont De i.e., Dupont De and Africa Oil go up and down completely randomly.
Pair Corralation between Dupont De and Africa Oil
Allowing for the 90-day total investment horizon Dupont De is expected to generate 4.2 times less return on investment than Africa Oil. But when comparing it to its historical volatility, Dupont De Nemours is 1.5 times less risky than Africa Oil. It trades about 0.02 of its potential returns per unit of risk. Africa Oil Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Africa Oil Corp on December 28, 2024 and sell it today you would earn a total of 9.00 from holding Africa Oil Corp or generate 6.67% 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. Africa Oil Corp
Performance |
Timeline |
Dupont De Nemours |
Africa Oil Corp |
Dupont De and Africa Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dupont De and Africa Oil
The main advantage of trading using opposite Dupont De and Africa Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Africa Oil 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 Africa Oil will offset losses from the drop in Africa Oil's long position.Dupont De vs. Eastman Chemical | Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide |
Africa Oil vs. Tamarack Valley Energy | Africa Oil vs. MEG Energy Corp | Africa Oil vs. Cardinal Energy | Africa Oil vs. Whitecap Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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