Correlation Between Dupont De and IShares SPTSX

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

Diversification Opportunities for Dupont De and IShares SPTSX

0.52

Correlation Coefficient

Dupont De  IShares SPTSX

Very weak diversification

The 3 months correlation between Dupont and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped 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 IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of Dupont De i.e., Dupont De and IShares SPTSX go up and down completely randomly.

Pair Corralation between Dupont De and IShares SPTSX

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.83 times more return on investment than IShares SPTSX. However, Dupont De Nemours is 1.2 times less risky than IShares SPTSX. It trades about -0.01 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about -0.06 per unit of risk. If you would invest  7,557  in Dupont De Nemours on December 29, 2024 and sell it today you would lose (154.00) from holding Dupont De Nemours or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Dupont De Nemours  vs.  iShares SPTSX Capped

Dupont De Nemours

Risk-Adjusted Performance

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares SPTSX Capped

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SPTSX Capped has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Dupont De and IShares SPTSX

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

The idea behind Dupont De Nemours and iShares SPTSX Capped 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.