Correlation Between Dupont De and Block

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

Diversification Opportunities for Dupont De and Block

-0.09

Correlation Coefficient

Dupont De  Block

Good diversification

The 3 months correlation between Dupont and Block is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc 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 Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of Dupont De i.e., Dupont De and Block go up and down completely randomly.

Pair Corralation between Dupont De and Block

Allowing for the 90-day total investment horizon Dupont De is expected to generate 11.67 times less return on investment than Block. But when comparing it to its historical volatility, Dupont De Nemours is 2.0 times less risky than Block. It trades about 0.03 of its potential returns per unit of risk. Block Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  6,417  in Block Inc on September 3, 2024 and sell it today you would earn a total of  2,438  from holding Block Inc or generate 37.99% return on investment over 90 days.

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

Dupont De Nemours  vs.  Block Inc

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Block Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Block Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Block reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Block

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

The idea behind Dupont De Nemours and Block Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.