Correlation Between Dupont De and Plazza AG

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

Diversification Opportunities for Dupont De and Plazza AG

-0.86

Correlation Coefficient

Dupont De  Plazza AG

Pay attention - limited upside

The 3 months correlation between Dupont and Plazza is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Plazza AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plazza AG 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 Plazza AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plazza AG has no effect on the direction of Dupont De i.e., Dupont De and Plazza AG go up and down completely randomly.

Pair Corralation between Dupont De and Plazza AG

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Plazza AG. In addition to that, Dupont De is 2.7 times more volatile than Plazza AG. It trades about -0.01 of its total potential returns per unit of risk. Plazza AG is currently generating about 0.16 per unit of volatility. If you would invest  30,100  in Plazza AG on October 9, 2024 and sell it today you would earn a total of  3,800  from holding Plazza AG or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.79%
Values	Daily Returns

Dupont De Nemours  vs.  Plazza AG

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.

Plazza AG

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Plazza AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Plazza AG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dupont De and Plazza AG

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

The idea behind Dupont De Nemours and Plazza AG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .