Correlation Between Dupont De and Ab Equity

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

Diversification Opportunities for Dupont De and Ab Equity

0.75

Correlation Coefficient

Dupont De  Ab Equity

Poor diversification

The 3 months correlation between Dupont and AUIAX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Ab Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Equity Income 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 Ab Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Equity Income has no effect on the direction of Dupont De i.e., Dupont De and Ab Equity go up and down completely randomly.

Pair Corralation between Dupont De and Ab Equity

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.45 times more return on investment than Ab Equity. However, Dupont De Nemours is 2.22 times less risky than Ab Equity. It trades about -0.59 of its potential returns per unit of risk. Ab Equity Income is currently generating about -0.29 per unit of risk. If you would invest  8,354  in Dupont De Nemours on October 10, 2024 and sell it today you would lose (846.00) from holding Dupont De Nemours or give up 10.13% 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.  Ab Equity Income

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ab Equity Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Equity Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dupont De and Ab Equity

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

The idea behind Dupont De Nemours and Ab Equity Income 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.