Correlation Between Dupont De and ALLSTATE

Can any of the company-specific risk be diversified away by investing in both Dupont De and ALLSTATE 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 ALLSTATE 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 ALLSTATE P 555, you can compare the effects of market volatilities on Dupont De and ALLSTATE 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 ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and ALLSTATE.

Diversification Opportunities for Dupont De and ALLSTATE

0.24

Correlation Coefficient

Dupont De  ALLSTATE

Modest diversification

The 3 months correlation between Dupont and ALLSTATE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and ALLSTATE P 555 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 555 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 ALLSTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLSTATE P 555 has no effect on the direction of Dupont De i.e., Dupont De and ALLSTATE go up and down completely randomly.

Pair Corralation between Dupont De and ALLSTATE

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.54 times less return on investment than ALLSTATE. But when comparing it to its historical volatility, Dupont De Nemours is 1.96 times less risky than ALLSTATE. It trades about 0.04 of its potential returns per unit of risk. ALLSTATE P 555 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,120  in ALLSTATE P 555 on October 22, 2024 and sell it today you would earn a total of  165.00  from holding ALLSTATE P 555 or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Dupont De Nemours  vs.  ALLSTATE P 555

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 latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ALLSTATE P 555

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 555 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and ALLSTATE

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

The idea behind Dupont De Nemours and ALLSTATE P 555 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 Anywhere module to track or share privately all of your investments from the convenience of any device.