Correlation Between Dupont De and Red Rock

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

Diversification Opportunities for Dupont De and Red Rock

0.82

Correlation Coefficient

Dupont De  Red Rock

Very poor diversification

The 3 months correlation between Dupont and Red is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of Dupont De i.e., Dupont De and Red Rock go up and down completely randomly.

Pair Corralation between Dupont De and Red Rock

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.83 times more return on investment than Red Rock. However, Dupont De Nemours is 1.21 times less risky than Red Rock. It trades about 0.0 of its potential returns per unit of risk. Red Rock Resorts is currently generating about -0.02 per unit of risk. If you would invest  7,685  in Dupont De Nemours on December 26, 2024 and sell it today you would lose (36.00) from holding Dupont De Nemours or give up 0.47% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Red Rock Resorts

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.

Red Rock Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Rock Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Red Rock 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 Red Rock

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

The idea behind Dupont De Nemours and Red Rock Resorts 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.