Correlation Between Dupont De and Global X

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

Diversification Opportunities for Dupont De and Global X

0.4

Correlation Coefficient

Dupont De  Global X

Very weak diversification

The 3 months correlation between Dupont and Global is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Global X Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Gold 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Gold has no effect on the direction of Dupont De i.e., Dupont De and Global X go up and down completely randomly.

Pair Corralation between Dupont De and Global X

Allowing for the 90-day total investment horizon Dupont De is expected to generate 6.3 times less return on investment than Global X. In addition to that, Dupont De is 2.45 times more volatile than Global X Gold. It trades about 0.02 of its total potential returns per unit of risk. Global X Gold is currently generating about 0.32 per unit of volatility. If you would invest  1,110  in Global X Gold on December 28, 2024 and sell it today you would earn a total of  149.00  from holding Global X Gold or generate 13.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Dupont De Nemours  vs.  Global X Gold

Dupont De Nemours

Risk-Adjusted Performance

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.

Global X Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Gold are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Global X

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

The idea behind Dupont De Nemours and Global X Gold 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.