Correlation Between Dupont De and PetIQ

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

Diversification Opportunities for Dupont De and PetIQ

0.37

Correlation Coefficient

Dupont De  PetIQ

Weak diversification

The 3 months correlation between Dupont and PetIQ is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc 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 PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Dupont De i.e., Dupont De and PetIQ go up and down completely randomly.

Pair Corralation between Dupont De and PetIQ

Allowing for the 90-day total investment horizon Dupont De is expected to generate 11.0 times less return on investment than PetIQ. But when comparing it to its historical volatility, Dupont De Nemours is 2.26 times less risky than PetIQ. It trades about 0.01 of its potential returns per unit of risk. PetIQ Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,741  in PetIQ Inc on October 4, 2024 and sell it today you would earn a total of  1,357  from holding PetIQ Inc or generate 77.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.1%
Values	Daily Returns

Dupont De Nemours  vs.  PetIQ Inc

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PetIQ Inc

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PetIQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dupont De and PetIQ

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

The idea behind Dupont De Nemours and PetIQ Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.