Correlation Between Dupont De and Innovator Growth

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

Diversification Opportunities for Dupont De and Innovator Growth

0.09

Correlation Coefficient

Dupont De  Innovator Growth

Significant diversification

The 3 months correlation between Dupont and Innovator is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Innovator Growth Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth Acc 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth Acc has no effect on the direction of Dupont De i.e., Dupont De and Innovator Growth go up and down completely randomly.

Pair Corralation between Dupont De and Innovator Growth

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 2.57 times more return on investment than Innovator Growth. However, Dupont De is 2.57 times more volatile than Innovator Growth Accelerated. It trades about 0.07 of its potential returns per unit of risk. Innovator Growth Accelerated is currently generating about -0.18 per unit of risk. If you would invest  7,570  in Dupont De Nemours on December 4, 2024 and sell it today you would earn a total of  199.00  from holding Dupont De Nemours or generate 2.63% return on investment over 90 days.

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

Dupont De Nemours  vs.  Innovator Growth Accelerated

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.

Innovator Growth Acc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Growth Accelerated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking indicators, Innovator Growth is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dupont De and Innovator Growth

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

The idea behind Dupont De Nemours and Innovator Growth Accelerated 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.