Correlation Between Dupont De and Franklin

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

Diversification Opportunities for Dupont De and Franklin

0.38

Correlation Coefficient

Dupont De  Franklin

Weak diversification

The 3 months correlation between Dupont and Franklin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Franklin Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Core Equity 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 Franklin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Core Equity has no effect on the direction of Dupont De i.e., Dupont De and Franklin go up and down completely randomly.

Pair Corralation between Dupont De and Franklin

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.33 times less return on investment than Franklin. In addition to that, Dupont De is 1.72 times more volatile than Franklin Core Equity. It trades about 0.04 of its total potential returns per unit of risk. Franklin Core Equity is currently generating about 0.08 per unit of volatility. If you would invest  1,244  in Franklin Core Equity on September 4, 2024 and sell it today you would earn a total of  536.00  from holding Franklin Core Equity or generate 43.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  Franklin Core Equity

Dupont De Nemours

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Franklin Core Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Core Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Franklin 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 Franklin

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

The idea behind Dupont De Nemours and Franklin Core Equity 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 CEOs Directory module to screen CEOs from public companies around the world.