Correlation Between Dupont De and Assicurazioni Generali

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

Diversification Opportunities for Dupont De and Assicurazioni Generali

0.45

Correlation Coefficient

Dupont De  Assicurazioni Generali

Very weak diversification

The 3 months correlation between Dupont and Assicurazioni is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of Dupont De i.e., Dupont De and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between Dupont De and Assicurazioni Generali

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Assicurazioni Generali. In addition to that, Dupont De is 1.37 times more volatile than Assicurazioni Generali SpA. It trades about -0.01 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.25 per unit of volatility. If you would invest  2,734  in Assicurazioni Generali SpA on December 30, 2024 and sell it today you would earn a total of  550.00  from holding Assicurazioni Generali SpA or generate 20.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Dupont De Nemours  vs.  Assicurazioni Generali SpA

Dupont De Nemours

Risk-Adjusted Performance

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 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.

Assicurazioni Generali

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Assicurazioni Generali reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Assicurazioni Generali

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

The idea behind Dupont De Nemours and Assicurazioni Generali SpA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.