Correlation Between Dupont De and Fabrinet

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

Diversification Opportunities for Dupont De and Fabrinet

0.29

Correlation Coefficient

Dupont De  Fabrinet

Modest diversification

The 3 months correlation between Dupont and Fabrinet is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Dupont De i.e., Dupont De and Fabrinet go up and down completely randomly.

Pair Corralation between Dupont De and Fabrinet

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.9 times less return on investment than Fabrinet. But when comparing it to its historical volatility, Dupont De Nemours is 2.53 times less risky than Fabrinet. It trades about 0.0 of its potential returns per unit of risk. Fabrinet is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  24,365  in Fabrinet on August 30, 2024 and sell it today you would lose (815.00) from holding Fabrinet or give up 3.34% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Fabrinet

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.

Fabrinet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fabrinet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fabrinet is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and Fabrinet

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

The idea behind Dupont De Nemours and Fabrinet 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.