Correlation Between Dupont De and Amg Frontier

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

Diversification Opportunities for Dupont De and Amg Frontier

0.61

Correlation Coefficient

Dupont De  Amg Frontier

Poor diversification

The 3 months correlation between Dupont and Amg is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Amg Frontier Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Frontier Small 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 Amg Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Frontier Small has no effect on the direction of Dupont De i.e., Dupont De and Amg Frontier go up and down completely randomly.

Pair Corralation between Dupont De and Amg Frontier

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.76 times less return on investment than Amg Frontier. In addition to that, Dupont De is 1.06 times more volatile than Amg Frontier Small. It trades about 0.02 of its total potential returns per unit of risk. Amg Frontier Small is currently generating about 0.03 per unit of volatility. If you would invest  748.00  in Amg Frontier Small on October 9, 2024 and sell it today you would earn a total of  75.00  from holding Amg Frontier Small or generate 10.03% return on investment over 90 days.

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

Dupont De Nemours  vs.  Amg Frontier Small

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.

Amg Frontier Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Frontier Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amg Frontier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Amg Frontier

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

The idea behind Dupont De Nemours and Amg Frontier Small 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.