Correlation Between Dupont De and Gold River

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

Diversification Opportunities for Dupont De and Gold River

-0.04

Correlation Coefficient

Dupont De  Gold River

Good diversification

The 3 months correlation between Dupont and Gold is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Gold River Prods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold River Prods 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 Gold River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold River Prods has no effect on the direction of Dupont De i.e., Dupont De and Gold River go up and down completely randomly.

Pair Corralation between Dupont De and Gold River

Allowing for the 90-day total investment horizon Dupont De is expected to generate 86.13 times less return on investment than Gold River. But when comparing it to its historical volatility, Dupont De Nemours is 15.23 times less risky than Gold River. It trades about 0.01 of its potential returns per unit of risk. Gold River Prods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Gold River Prods on December 18, 2024 and sell it today you would lose (0.01) from holding Gold River Prods or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Dupont De Nemours  vs.  Gold River Prods

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) 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.

Gold River Prods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold River Prods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Gold River

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

The idea behind Dupont De Nemours and Gold River Prods 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.