Correlation Between Dupont De and Regional Health

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

Diversification Opportunities for Dupont De and Regional Health

0.14

Correlation Coefficient

Dupont De  Regional Health

Average diversification

The 3 months correlation between Dupont and Regional is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of Dupont De i.e., Dupont De and Regional Health go up and down completely randomly.

Pair Corralation between Dupont De and Regional Health

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.87 times less return on investment than Regional Health. But when comparing it to its historical volatility, Dupont De Nemours is 5.1 times less risky than Regional Health. It trades about 0.03 of its potential returns per unit of risk. Regional Health Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Regional Health Properties on August 31, 2024 and sell it today you would lose (12.00) from holding Regional Health Properties or give up 6.45% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Regional Health Properties

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

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

Regional Health Prop

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Health Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Regional Health may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Dupont De and Regional Health

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

The idea behind Dupont De Nemours and Regional Health Properties 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.