Correlation Between Dupont De and Federated Bond

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

Diversification Opportunities for Dupont De and Federated Bond

0.73

Correlation Coefficient

Dupont De  Federated Bond

Poor diversification

The 3 months correlation between Dupont and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond 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 Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of Dupont De i.e., Dupont De and Federated Bond go up and down completely randomly.

Pair Corralation between Dupont De and Federated Bond

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Federated Bond. In addition to that, Dupont De is 4.18 times more volatile than Federated Bond Fund. It trades about -0.08 of its total potential returns per unit of risk. Federated Bond Fund is currently generating about -0.02 per unit of volatility. If you would invest  829.00  in Federated Bond Fund on October 25, 2024 and sell it today you would lose (3.00) from holding Federated Bond Fund or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Federated Bond Fund

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 unfluctuating 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.

Federated Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Federated Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Federated Bond

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

The idea behind Dupont De Nemours and Federated Bond Fund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.