Correlation Between Dupont De and IShares SP

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

Diversification Opportunities for Dupont De and IShares SP

-0.04

Correlation Coefficient

Dupont De  IShares SP

Good diversification

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

Pair Corralation between Dupont De and IShares SP

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the IShares SP. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.3 times less risky than IShares SP. The stock trades about -0.66 of its potential returns per unit of risk. The iShares SP SmallCap is currently generating about -0.35 of returns per unit of risk over similar time horizon. If you would invest  10,125  in iShares SP SmallCap on October 8, 2024 and sell it today you would lose (710.00) from holding iShares SP SmallCap or give up 7.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Dupont De Nemours  vs.  iShares SP SmallCap

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.

iShares SP SmallCap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP SmallCap are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dupont De and IShares SP

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

The idea behind Dupont De Nemours and iShares SP SmallCap 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.