Correlation Between Dupont De and SL Green

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

Diversification Opportunities for Dupont De and SL Green

0.1

Correlation Coefficient

Dupont De  SL Green

Average diversification

The 3 months correlation between Dupont and SLG is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Dupont De i.e., Dupont De and SL Green go up and down completely randomly.

Pair Corralation between Dupont De and SL Green

Allowing for the 90-day total investment horizon Dupont De is expected to generate 98.47 times less return on investment than SL Green. But when comparing it to its historical volatility, Dupont De Nemours is 1.33 times less risky than SL Green. It trades about 0.0 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,619  in SL Green Realty on August 30, 2024 and sell it today you would earn a total of  1,266  from holding SL Green Realty or generate 19.13% return on investment over 90 days.

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

Dupont De Nemours  vs.  SL Green Realty

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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

SL Green Realty

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, SL Green reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and SL Green

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

The idea behind Dupont De Nemours and SL Green Realty 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.