Correlation Between Dupont De and IOC

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

Diversification Opportunities for Dupont De and IOC

-0.13

Correlation Coefficient

Dupont De  IOC

Good diversification

The 3 months correlation between Dupont and IOC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and IOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOC 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 IOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOC has no effect on the direction of Dupont De i.e., Dupont De and IOC go up and down completely randomly.

Pair Corralation between Dupont De and IOC

Allowing for the 90-day total investment horizon Dupont De is expected to generate 15.21 times less return on investment than IOC. But when comparing it to its historical volatility, Dupont De Nemours is 2.6 times less risky than IOC. It trades about 0.06 of its potential returns per unit of risk. IOC is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  0.90  in IOC on September 5, 2024 and sell it today you would earn a total of  0.34  from holding IOC or generate 37.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Dupont De Nemours  vs.  IOC

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) 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.

IOC

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IOC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, IOC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and IOC

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

The idea behind Dupont De Nemours and IOC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.