Correlation Between Dupont De and Baron Select

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

Diversification Opportunities for Dupont De and Baron Select

-0.15

Correlation Coefficient

Dupont De  Baron Select

Good diversification

The 3 months correlation between Dupont and Baron is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds 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 Baron Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Dupont De i.e., Dupont De and Baron Select go up and down completely randomly.

Pair Corralation between Dupont De and Baron Select

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Baron Select. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.11 times less risky than Baron Select. The stock trades about -0.03 of its potential returns per unit of risk. The Baron Select Funds is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,304  in Baron Select Funds on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Baron Select Funds or generate 0.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Dupont De Nemours  vs.  Baron Select Funds

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.

Baron Select Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Select Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Baron Select 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 Baron Select

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

The idea behind Dupont De Nemours and Baron Select Funds 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 Anywhere module to track or share privately all of your investments from the convenience of any device.