Correlation Between Dupont De and Appleseed Fund

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

Diversification Opportunities for Dupont De and Appleseed Fund

0.67

Correlation Coefficient

Dupont De  Appleseed Fund

Poor diversification

The 3 months correlation between Dupont and Appleseed is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Appleseed Fund Appleseed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appleseed Fund Appleseed 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 Appleseed Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appleseed Fund Appleseed has no effect on the direction of Dupont De i.e., Dupont De and Appleseed Fund go up and down completely randomly.

Pair Corralation between Dupont De and Appleseed Fund

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Appleseed Fund. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.68 times less risky than Appleseed Fund. The stock trades about -0.6 of its potential returns per unit of risk. The Appleseed Fund Appleseed is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  1,548  in Appleseed Fund Appleseed on October 9, 2024 and sell it today you would lose (122.00) from holding Appleseed Fund Appleseed or give up 7.88% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Appleseed Fund Appleseed

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.

Appleseed Fund Appleseed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appleseed Fund Appleseed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Appleseed Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Appleseed Fund

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

The idea behind Dupont De Nemours and Appleseed Fund Appleseed 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.