Correlation Between Dupont De and SPAR

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

Diversification Opportunities for Dupont De and SPAR

-0.7

Correlation Coefficient

Dupont De  SPAR

Excellent diversification

The 3 months correlation between Dupont and SPAR is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Dupont De i.e., Dupont De and SPAR go up and down completely randomly.

Pair Corralation between Dupont De and SPAR

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.31 times less return on investment than SPAR. But when comparing it to its historical volatility, Dupont De Nemours is 1.27 times less risky than SPAR. It trades about 0.02 of its potential returns per unit of risk. SPAR Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,378,600  in SPAR Group on October 10, 2024 and sell it today you would earn a total of  104,500  from holding SPAR Group or generate 7.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.99%
Values	Daily Returns

Dupont De Nemours  vs.  SPAR Group

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.

SPAR Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SPAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and SPAR

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

The idea behind Dupont De Nemours and SPAR Group 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.