Correlation Between Dupont De and Hartford Growth

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

Diversification Opportunities for Dupont De and Hartford Growth

0.25

Correlation Coefficient

Dupont De  Hartford Growth

Modest diversification

The 3 months correlation between Dupont and Hartford is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Hartford Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth Oppo 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 Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth Oppo has no effect on the direction of Dupont De i.e., Dupont De and Hartford Growth go up and down completely randomly.

Pair Corralation between Dupont De and Hartford Growth

Allowing for the 90-day total investment horizon Dupont De is expected to generate 4.78 times less return on investment than Hartford Growth. In addition to that, Dupont De is 1.27 times more volatile than Hartford Growth Opportunities. It trades about 0.04 of its total potential returns per unit of risk. Hartford Growth Opportunities is currently generating about 0.24 per unit of volatility. If you would invest  6,230  in Hartford Growth Opportunities on September 4, 2024 and sell it today you would earn a total of  1,097  from holding Hartford Growth Opportunities or generate 17.61% 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.  Hartford Growth Opportunities

Dupont De Nemours

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 3 (%) 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.

Hartford Growth Oppo

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Growth Opportunities are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Hartford Growth

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

The idea behind Dupont De Nemours and Hartford Growth Opportunities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.