Correlation Between Dupont De and GP Investments

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

Diversification Opportunities for Dupont De and GP Investments

0.29

Correlation Coefficient

Dupont De  GP Investments

Modest diversification

The 3 months correlation between Dupont and GPIV33 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Dupont De i.e., Dupont De and GP Investments go up and down completely randomly.

Pair Corralation between Dupont De and GP Investments

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.5 times less return on investment than GP Investments. But when comparing it to its historical volatility, Dupont De Nemours is 3.09 times less risky than GP Investments. It trades about 0.03 of its potential returns per unit of risk. GP Investments is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  403.00  in GP Investments on August 31, 2024 and sell it today you would lose (5.00) from holding GP Investments or give up 1.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Dupont De Nemours  vs.  GP Investments

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

GP Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and GP Investments

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

The idea behind Dupont De Nemours and GP Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.