Correlation Between Dupont De and NRJ

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

Diversification Opportunities for Dupont De and NRJ

0.28

Correlation Coefficient

Dupont De  NRJ

Modest diversification

The 3 months correlation between Dupont and NRJ is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and NRJ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRJ Group 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 NRJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRJ Group has no effect on the direction of Dupont De i.e., Dupont De and NRJ go up and down completely randomly.

Pair Corralation between Dupont De and NRJ

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.56 times more return on investment than NRJ. However, Dupont De is 1.56 times more volatile than NRJ Group. It trades about 0.04 of its potential returns per unit of risk. NRJ Group is currently generating about -0.19 per unit of risk. If you would invest  8,005  in Dupont De Nemours on September 12, 2024 and sell it today you would earn a total of  203.00  from holding Dupont De Nemours or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dupont De Nemours  vs.  NRJ Group

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Insignificant

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

NRJ Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRJ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dupont De and NRJ

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

The idea behind Dupont De Nemours and NRJ Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.