Correlation Between Dupont De and First Mining

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

Diversification Opportunities for Dupont De and First Mining

-0.09

Correlation Coefficient

Dupont De  First Mining

Good diversification

The 3 months correlation between Dupont and First is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Dupont De i.e., Dupont De and First Mining go up and down completely randomly.

Pair Corralation between Dupont De and First Mining

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.35 times less return on investment than First Mining. But when comparing it to its historical volatility, Dupont De Nemours is 3.67 times less risky than First Mining. It trades about 0.03 of its potential returns per unit of risk. First Mining Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9.80  in First Mining Gold on September 2, 2024 and sell it today you would lose (0.40) from holding First Mining Gold or give up 4.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dupont De Nemours  vs.  First Mining Gold

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) 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.

First Mining Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Mining Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, First Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dupont De and First Mining

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

The idea behind Dupont De Nemours and First Mining Gold 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.