Correlation Between Dupont De and Cognex

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

Diversification Opportunities for Dupont De and Cognex

-0.37

Correlation Coefficient

Dupont De  Cognex

Very good diversification

The 3 months correlation between Dupont and Cognex is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex 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 Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Dupont De i.e., Dupont De and Cognex go up and down completely randomly.

Pair Corralation between Dupont De and Cognex

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.61 times more return on investment than Cognex. However, Dupont De Nemours is 1.65 times less risky than Cognex. It trades about 0.02 of its potential returns per unit of risk. Cognex is currently generating about -0.08 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Dupont De Nemours or generate 1.22% 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.  Cognex

Dupont De Nemours

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) 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.

Cognex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cognex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dupont De and Cognex

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

The idea behind Dupont De Nemours and Cognex 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.