Correlation Between Dupont De and ENCP Old

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

Diversification Opportunities for Dupont De and ENCP Old

0.43

Correlation Coefficient

Dupont De  ENCP Old

Very weak diversification

The 3 months correlation between Dupont and ENCP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and ENCP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCP Old 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 ENCP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCP Old has no effect on the direction of Dupont De i.e., Dupont De and ENCP Old go up and down completely randomly.

Pair Corralation between Dupont De and ENCP Old

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.19 times more return on investment than ENCP Old. However, Dupont De Nemours is 5.33 times less risky than ENCP Old. It trades about 0.02 of its potential returns per unit of risk. ENCP Old is currently generating about -0.01 per unit of risk. If you would invest  7,000  in Dupont De Nemours on October 10, 2024 and sell it today you would earn a total of  508.00  from holding Dupont De Nemours or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.79%
Values	Daily Returns

Dupont De Nemours  vs.  ENCP Old

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ENCP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENCP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ENCP Old is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dupont De and ENCP Old

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

The idea behind Dupont De Nemours and ENCP Old 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.