Correlation Between Dupont De and IndexIQ

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

Diversification Opportunities for Dupont De and IndexIQ

0.54

Correlation Coefficient

Dupont De  IndexIQ

Very weak diversification

The 3 months correlation between Dupont and IndexIQ is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Dupont De i.e., Dupont De and IndexIQ go up and down completely randomly.

Pair Corralation between Dupont De and IndexIQ

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.46 times more return on investment than IndexIQ. However, Dupont De is 1.46 times more volatile than IndexIQ. It trades about 0.02 of its potential returns per unit of risk. IndexIQ is currently generating about 0.02 per unit of risk. If you would invest  7,000  in Dupont De Nemours on October 10, 2024 and sell it today you would earn a total of  508.00  from holding Dupont De Nemours or generate 7.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.94%
Values	Daily Returns

Dupont De Nemours  vs.  IndexIQ

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.

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IndexIQ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dupont De and IndexIQ

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

The idea behind Dupont De Nemours and IndexIQ 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.