Correlation Between Dupont De and Pan American

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

Diversification Opportunities for Dupont De and Pan American

0.41

Correlation Coefficient

Dupont De  Pan American

Very weak diversification

The 3 months correlation between Dupont and Pan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Dupont De i.e., Dupont De and Pan American go up and down completely randomly.

Pair Corralation between Dupont De and Pan American

Allowing for the 90-day total investment horizon Dupont De is expected to generate 23.99 times less return on investment than Pan American. But when comparing it to its historical volatility, Dupont De Nemours is 1.67 times less risky than Pan American. It trades about 0.01 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,049  in Pan American Silver on December 27, 2024 and sell it today you would earn a total of  526.00  from holding Pan American Silver or generate 25.67% return on investment over 90 days.

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

Dupont De Nemours  vs.  Pan American Silver

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

Pan American Silver

Risk-Adjusted Performance

Good

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

Pair Trading with Dupont De and Pan American

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

The idea behind Dupont De Nemours and Pan American Silver 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.