Correlation Between Dupont De and Creative Media

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

Diversification Opportunities for Dupont De and Creative Media

0.24

Correlation Coefficient

Dupont De  Creative Media

Modest diversification

The 3 months correlation between Dupont and Creative is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community 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 Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of Dupont De i.e., Dupont De and Creative Media go up and down completely randomly.

Pair Corralation between Dupont De and Creative Media

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Creative Media. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 82.28 times less risky than Creative Media. The stock trades about -0.01 of its potential returns per unit of risk. The Creative Media Community is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,170  in Creative Media Community on December 29, 2024 and sell it today you would earn a total of  1,880  from holding Creative Media Community or generate 30.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.25%
Values	Daily Returns

Dupont De Nemours  vs.  Creative Media Community

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

Creative Media Community

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Media Community are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Creative Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Creative Media

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

The idea behind Dupont De Nemours and Creative Media Community 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.