Correlation Between Dupont De and GIBB River

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

Diversification Opportunities for Dupont De and GIBB River

-0.24

Correlation Coefficient

Dupont De  GIBB River

Very good diversification

The 3 months correlation between Dupont and GIBB is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and GIBB River Diamonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIBB River Diamonds 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 GIBB River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIBB River Diamonds has no effect on the direction of Dupont De i.e., Dupont De and GIBB River go up and down completely randomly.

Pair Corralation between Dupont De and GIBB River

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the GIBB River. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 8.58 times less risky than GIBB River. The stock trades about -0.64 of its potential returns per unit of risk. The GIBB River Diamonds is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.90  in GIBB River Diamonds on October 8, 2024 and sell it today you would earn a total of  0.20  from holding GIBB River Diamonds or generate 5.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Dupont De Nemours  vs.  GIBB River Diamonds

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.

GIBB River Diamonds

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GIBB River Diamonds are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, GIBB River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and GIBB River

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

The idea behind Dupont De Nemours and GIBB River Diamonds 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.