Correlation Between Dupont De and INGERSOLL

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

Diversification Opportunities for Dupont De and INGERSOLL

0.61

Correlation Coefficient

Dupont De  INGERSOLL

Poor diversification

The 3 months correlation between Dupont and INGERSOLL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Dupont De i.e., Dupont De and INGERSOLL go up and down completely randomly.

Pair Corralation between Dupont De and INGERSOLL

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the INGERSOLL. In addition to that, Dupont De is 4.22 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about -0.09 of its total potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about 0.0 per unit of volatility. If you would invest  9,689  in INGERSOLL RAND GLOBAL HLDG on September 19, 2024 and sell it today you would earn a total of  0.00  from holding INGERSOLL RAND GLOBAL HLDG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Dupont De Nemours  vs.  INGERSOLL RAND GLOBAL HLDG

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 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.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dupont De and INGERSOLL

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

The idea behind Dupont De Nemours and INGERSOLL RAND GLOBAL HLDG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.