Correlation Between Dupont De and IShares Commodity

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

Diversification Opportunities for Dupont De and IShares Commodity

0.67

Correlation Coefficient

Dupont De  IShares Commodity

Poor diversification

The 3 months correlation between Dupont and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and iShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Commodity Curve 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 IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Commodity Curve has no effect on the direction of Dupont De i.e., Dupont De and IShares Commodity go up and down completely randomly.

Pair Corralation between Dupont De and IShares Commodity

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.41 times less return on investment than IShares Commodity. In addition to that, Dupont De is 1.42 times more volatile than iShares Commodity Curve. It trades about 0.04 of its total potential returns per unit of risk. iShares Commodity Curve is currently generating about 0.07 per unit of volatility. If you would invest  2,010  in iShares Commodity Curve on September 12, 2024 and sell it today you would earn a total of  83.00  from holding iShares Commodity Curve or generate 4.13% return on investment over 90 days.

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

Dupont De Nemours  vs.  iShares Commodity Curve

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Insignificant

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

iShares Commodity Curve

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Commodity Curve are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Commodity is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dupont De and IShares Commodity

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

The idea behind Dupont De Nemours and iShares Commodity Curve 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.