Correlation Between Dupont De and Simt Small

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

Diversification Opportunities for Dupont De and Simt Small

0.74

Correlation Coefficient

Dupont De  Simt Small

Poor diversification

The 3 months correlation between Dupont and Simt is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Simt Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Small Cap 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 Simt Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Small Cap has no effect on the direction of Dupont De i.e., Dupont De and Simt Small go up and down completely randomly.

Pair Corralation between Dupont De and Simt Small

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.58 times less return on investment than Simt Small. In addition to that, Dupont De is 1.01 times more volatile than Simt Small Cap. It trades about 0.06 of its total potential returns per unit of risk. Simt Small Cap is currently generating about 0.16 per unit of volatility. If you would invest  3,325  in Simt Small Cap on October 25, 2024 and sell it today you would earn a total of  108.00  from holding Simt Small Cap or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Dupont De Nemours  vs.  Simt Small Cap

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 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.

Simt Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Simt Small 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 Simt Small

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

The idea behind Dupont De Nemours and Simt Small Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.