Correlation Between Dupont De and Motor Oil

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

Diversification Opportunities for Dupont De and Motor Oil

0.34

Correlation Coefficient

Dupont De  Motor Oil

Weak diversification

The 3 months correlation between Dupont and Motor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Motor Oil Corinth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motor Oil Corinth 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 Motor Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motor Oil Corinth has no effect on the direction of Dupont De i.e., Dupont De and Motor Oil go up and down completely randomly.

Pair Corralation between Dupont De and Motor Oil

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Motor Oil. In addition to that, Dupont De is 1.21 times more volatile than Motor Oil Corinth. It trades about -0.01 of its total potential returns per unit of risk. Motor Oil Corinth is currently generating about 0.16 per unit of volatility. If you would invest  2,024  in Motor Oil Corinth on December 28, 2024 and sell it today you would earn a total of  264.00  from holding Motor Oil Corinth or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Motor Oil Corinth

Dupont De Nemours

Risk-Adjusted Performance

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 rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Motor Oil Corinth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Motor Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Motor Oil

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

The idea behind Dupont De Nemours and Motor Oil Corinth 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.