Correlation Between Dupont De and Medical Properties

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

Diversification Opportunities for Dupont De and Medical Properties

0.64

Correlation Coefficient

Dupont De  Medical Properties

Poor diversification

The 3 months correlation between Dupont and Medical is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Dupont De i.e., Dupont De and Medical Properties go up and down completely randomly.

Pair Corralation between Dupont De and Medical Properties

Allowing for the 90-day total investment horizon Dupont De is expected to generate 28.65 times less return on investment than Medical Properties. But when comparing it to its historical volatility, Dupont De Nemours is 3.09 times less risky than Medical Properties. It trades about 0.03 of its potential returns per unit of risk. Medical Properties Trust is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Medical Properties Trust on October 25, 2024 and sell it today you would earn a total of  58.00  from holding Medical Properties Trust or generate 16.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Dupont De Nemours  vs.  Medical Properties Trust

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.

Medical Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Medical Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dupont De and Medical Properties

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

The idea behind Dupont De Nemours and Medical Properties Trust 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.