Correlation Between Dupont De and VanEck Defense

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

Diversification Opportunities for Dupont De and VanEck Defense

0.13

Correlation Coefficient

Dupont De  VanEck Defense

Average diversification

The 3 months correlation between Dupont and VanEck is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and VanEck Defense ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Defense ETF 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 VanEck Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Defense ETF has no effect on the direction of Dupont De i.e., Dupont De and VanEck Defense go up and down completely randomly.

Pair Corralation between Dupont De and VanEck Defense

Allowing for the 90-day total investment horizon Dupont De is expected to generate 15.95 times less return on investment than VanEck Defense. But when comparing it to its historical volatility, Dupont De Nemours is 1.03 times less risky than VanEck Defense. It trades about 0.02 of its potential returns per unit of risk. VanEck Defense ETF is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,599  in VanEck Defense ETF on December 20, 2024 and sell it today you would earn a total of  1,023  from holding VanEck Defense ETF or generate 28.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Dupont De Nemours  vs.  VanEck Defense ETF

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

VanEck Defense ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and VanEck Defense

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

The idea behind Dupont De Nemours and VanEck Defense ETF 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.