Correlation Between Dupont De and CMUV Bancorp

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

Diversification Opportunities for Dupont De and CMUV Bancorp

0.23

Correlation Coefficient

Dupont De  CMUV Bancorp

Modest diversification

The 3 months correlation between Dupont and CMUV is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and CMUV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMUV 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 CMUV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMUV Bancorp has no effect on the direction of Dupont De i.e., Dupont De and CMUV Bancorp go up and down completely randomly.

Pair Corralation between Dupont De and CMUV Bancorp

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the CMUV Bancorp. In addition to that, Dupont De is 1.4 times more volatile than CMUV Bancorp. It trades about -0.03 of its total potential returns per unit of risk. CMUV Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  2,088  in CMUV Bancorp on December 17, 2024 and sell it today you would earn a total of  32.00  from holding CMUV Bancorp or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Dupont De Nemours  vs.  CMUV Bancorp

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.

CMUV Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CMUV Bancorp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dupont De and CMUV Bancorp

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

The idea behind Dupont De Nemours and CMUV 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.