Correlation Between Dupont De and Silk Road

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

Diversification Opportunities for Dupont De and Silk Road

-0.88

Correlation Coefficient

Dupont De  Silk Road

Pay attention - limited upside

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

Pair Corralation between Dupont De and Silk Road

Allowing for the 90-day total investment horizon Dupont De is expected to generate 44.81 times less return on investment than Silk Road. But when comparing it to its historical volatility, Dupont De Nemours is 2.27 times less risky than Silk Road. It trades about 0.01 of its potential returns per unit of risk. Silk Road Medical is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  713.00  in Silk Road Medical on October 5, 2024 and sell it today you would earn a total of  2,036  from holding Silk Road Medical or generate 285.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	78.06%
Values	Daily Returns

Dupont De Nemours  vs.  Silk Road Medical

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 inconsistent 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.

Silk Road Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dupont De and Silk Road

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

The idea behind Dupont De Nemours and Silk Road Medical 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.