Correlation Between Dupont De and Ameriwest Lithium

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

Diversification Opportunities for Dupont De and Ameriwest Lithium

0.06

Correlation Coefficient

Dupont De  Ameriwest Lithium

Significant diversification

The 3 months correlation between Dupont and Ameriwest is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Ameriwest Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriwest Lithium 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 Ameriwest Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriwest Lithium has no effect on the direction of Dupont De i.e., Dupont De and Ameriwest Lithium go up and down completely randomly.

Pair Corralation between Dupont De and Ameriwest Lithium

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Ameriwest Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 5.14 times less risky than Ameriwest Lithium. The stock trades about -0.1 of its potential returns per unit of risk. The Ameriwest Lithium is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Ameriwest Lithium on August 31, 2024 and sell it today you would lose (1.00) from holding Ameriwest Lithium or give up 8.33% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Ameriwest Lithium

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Ameriwest Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameriwest Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dupont De and Ameriwest Lithium

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

The idea behind Dupont De Nemours and Ameriwest Lithium 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.