Correlation Between Dupont De and Thornburg Income

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

Diversification Opportunities for Dupont De and Thornburg Income

0.37

Correlation Coefficient

Dupont De  Thornburg Income

Weak diversification

The 3 months correlation between Dupont and Thornburg is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Thornburg Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Income Builder 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 Thornburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Income Builder has no effect on the direction of Dupont De i.e., Dupont De and Thornburg Income go up and down completely randomly.

Pair Corralation between Dupont De and Thornburg Income

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Thornburg Income. In addition to that, Dupont De is 2.77 times more volatile than Thornburg Income Builder. It trades about -0.01 of its total potential returns per unit of risk. Thornburg Income Builder is currently generating about 0.26 per unit of volatility. If you would invest  1,619  in Thornburg Income Builder on December 29, 2024 and sell it today you would earn a total of  155.00  from holding Thornburg Income Builder or generate 9.57% return on investment over 90 days.

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

Dupont De Nemours  vs.  Thornburg Income Builder

Dupont De Nemours

Risk-Adjusted Performance

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

Thornburg Income Builder

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Income Builder are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Thornburg Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dupont De and Thornburg Income

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

The idea behind Dupont De Nemours and Thornburg Income Builder 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.