Correlation Between Dupont De and Seafarer Overseas

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

Diversification Opportunities for Dupont De and Seafarer Overseas

0.88

Correlation Coefficient

Dupont De  Seafarer Overseas

Very poor diversification

The 3 months correlation between Dupont and Seafarer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Seafarer Overseas Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seafarer Overseas Growth 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 Seafarer Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seafarer Overseas Growth has no effect on the direction of Dupont De i.e., Dupont De and Seafarer Overseas go up and down completely randomly.

Pair Corralation between Dupont De and Seafarer Overseas

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Seafarer Overseas. In addition to that, Dupont De is 2.48 times more volatile than Seafarer Overseas Growth. It trades about -0.03 of its total potential returns per unit of risk. Seafarer Overseas Growth is currently generating about 0.05 per unit of volatility. If you would invest  1,194  in Seafarer Overseas Growth on November 29, 2024 and sell it today you would earn a total of  20.00  from holding Seafarer Overseas Growth or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Dupont De Nemours  vs.  Seafarer Overseas Growth

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.

Seafarer Overseas Growth

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seafarer Overseas Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Seafarer Overseas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Seafarer Overseas

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

The idea behind Dupont De Nemours and Seafarer Overseas Growth 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.