Correlation Between Dupont De and ECS Botanics

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

Diversification Opportunities for Dupont De and ECS Botanics

0.29

Correlation Coefficient

Dupont De  ECS Botanics

Modest diversification

The 3 months correlation between Dupont and ECS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and ECS Botanics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECS Botanics Holdings 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 ECS Botanics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECS Botanics Holdings has no effect on the direction of Dupont De i.e., Dupont De and ECS Botanics go up and down completely randomly.

Pair Corralation between Dupont De and ECS Botanics

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the ECS Botanics. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 4.19 times less risky than ECS Botanics. The stock trades about 0.0 of its potential returns per unit of risk. The ECS Botanics Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.80  in ECS Botanics Holdings on October 22, 2024 and sell it today you would lose (0.20) from holding ECS Botanics Holdings or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Dupont De Nemours  vs.  ECS Botanics Holdings

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ECS Botanics Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECS Botanics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dupont De and ECS Botanics

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

The idea behind Dupont De Nemours and ECS Botanics Holdings 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.