Correlation Between Dupont De and Hamilton MidSmall

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

Diversification Opportunities for Dupont De and Hamilton MidSmall

0.33

Correlation Coefficient

Dupont De  Hamilton MidSmall

Weak diversification

The 3 months correlation between Dupont and Hamilton is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Hamilton MidSmall Cap Financia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton MidSmall Cap 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 Hamilton MidSmall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton MidSmall Cap has no effect on the direction of Dupont De i.e., Dupont De and Hamilton MidSmall go up and down completely randomly.

Pair Corralation between Dupont De and Hamilton MidSmall

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Hamilton MidSmall. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.24 times less risky than Hamilton MidSmall. The stock trades about -0.09 of its potential returns per unit of risk. The Hamilton MidSmall Cap Financials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,474  in Hamilton MidSmall Cap Financials on October 27, 2024 and sell it today you would earn a total of  221.00  from holding Hamilton MidSmall Cap Financials or generate 6.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Dupont De Nemours  vs.  Hamilton MidSmall Cap Financia

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.

Hamilton MidSmall Cap

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton MidSmall Cap Financials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Hamilton MidSmall may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dupont De and Hamilton MidSmall

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

The idea behind Dupont De Nemours and Hamilton MidSmall Cap Financials 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.