Correlation Between Dupont De and United Homes

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

Diversification Opportunities for Dupont De and United Homes

-0.12

Correlation Coefficient

Dupont De  United Homes

Good diversification

The 3 months correlation between Dupont and United is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of Dupont De i.e., Dupont De and United Homes go up and down completely randomly.

Pair Corralation between Dupont De and United Homes

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.35 times more return on investment than United Homes. However, Dupont De Nemours is 2.89 times less risky than United Homes. It trades about 0.02 of its potential returns per unit of risk. United Homes Group is currently generating about -0.11 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Dupont De Nemours or generate 1.22% 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.  United Homes Group

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 1 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

United Homes Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Homes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dupont De and United Homes

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

The idea behind Dupont De Nemours and United Homes 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.