Correlation Between Dupont De and CONSOLIDATED

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

Diversification Opportunities for Dupont De and CONSOLIDATED

0.8

Correlation Coefficient

Dupont De  CONSOLIDATED

Very poor diversification

The 3 months correlation between Dupont and CONSOLIDATED is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Dupont De i.e., Dupont De and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Dupont De and CONSOLIDATED

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the CONSOLIDATED. In addition to that, Dupont De is 1.28 times more volatile than CONSOLIDATED EDISON N. It trades about -0.6 of its total potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about -0.27 per unit of volatility. If you would invest  10,198  in CONSOLIDATED EDISON N on October 9, 2024 and sell it today you would lose (316.00) from holding CONSOLIDATED EDISON N or give up 3.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	84.21%
Values	Daily Returns

Dupont De Nemours  vs.  CONSOLIDATED EDISON N

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 unfluctuating 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.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSOLIDATED 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 CONSOLIDATED

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

The idea behind Dupont De Nemours and CONSOLIDATED EDISON N 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.