Correlation Between Dupont De and Amer Beacon

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

Diversification Opportunities for Dupont De and Amer Beacon

0.34

Correlation Coefficient

Dupont De  Amer Beacon

Weak diversification

The 3 months correlation between Dupont and Amer is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Dupont De i.e., Dupont De and Amer Beacon go up and down completely randomly.

Pair Corralation between Dupont De and Amer Beacon

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.79 times less return on investment than Amer Beacon. In addition to that, Dupont De is 3.98 times more volatile than Amer Beacon Garcia. It trades about 0.01 of its total potential returns per unit of risk. Amer Beacon Garcia is currently generating about 0.12 per unit of volatility. If you would invest  832.00  in Amer Beacon Garcia on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Amer Beacon Garcia or generate 2.88% return on investment over 90 days.

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

Dupont De Nemours  vs.  Amer Beacon Garcia

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.

Amer Beacon Garcia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Garcia are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amer Beacon 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 Amer Beacon

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

The idea behind Dupont De Nemours and Amer Beacon Garcia 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.