Correlation Between Dupont De and HUBBELL

Can any of the company-specific risk be diversified away by investing in both Dupont De and HUBBELL 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 HUBBELL 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 HUBBELL INC 35, you can compare the effects of market volatilities on Dupont De and HUBBELL 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 HUBBELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and HUBBELL.

Diversification Opportunities for Dupont De and HUBBELL

0.44

Correlation Coefficient

Dupont De  HUBBELL

Very weak diversification

The 3 months correlation between Dupont and HUBBELL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and HUBBELL INC 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUBBELL INC 35 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 HUBBELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUBBELL INC 35 has no effect on the direction of Dupont De i.e., Dupont De and HUBBELL go up and down completely randomly.

Pair Corralation between Dupont De and HUBBELL

Allowing for the 90-day total investment horizon Dupont De is expected to generate 227.9 times less return on investment than HUBBELL. But when comparing it to its historical volatility, Dupont De Nemours is 59.12 times less risky than HUBBELL. It trades about 0.02 of its potential returns per unit of risk. HUBBELL INC 35 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,438  in HUBBELL INC 35 on October 26, 2024 and sell it today you would earn a total of  176.00  from holding HUBBELL INC 35 or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.85%
Values	Daily Returns

Dupont De Nemours  vs.  HUBBELL INC 35

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.

HUBBELL INC 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUBBELL INC 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUBBELL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and HUBBELL

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

The idea behind Dupont De Nemours and HUBBELL INC 35 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.