Correlation Between Dupont De and Brookline Bancorp

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

Diversification Opportunities for Dupont De and Brookline Bancorp

-0.17

Correlation Coefficient

Dupont De  Brookline Bancorp

Good diversification

The 3 months correlation between Dupont and Brookline is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp 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 Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Dupont De i.e., Dupont De and Brookline Bancorp go up and down completely randomly.

Pair Corralation between Dupont De and Brookline Bancorp

Allowing for the 90-day total investment horizon Dupont De is expected to generate 8.77 times less return on investment than Brookline Bancorp. But when comparing it to its historical volatility, Dupont De Nemours is 1.56 times less risky than Brookline Bancorp. It trades about 0.03 of its potential returns per unit of risk. Brookline Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Brookline Bancorp on September 3, 2024 and sell it today you would earn a total of  260.00  from holding Brookline Bancorp or generate 26.03% return on investment over 90 days.

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

Dupont De Nemours  vs.  Brookline Bancorp

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Brookline Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookline Bancorp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Brookline Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Brookline Bancorp

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

The idea behind Dupont De Nemours and Brookline Bancorp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.