Correlation Between Dupont De and Home First

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

Diversification Opportunities for Dupont De and Home First

0.59

Correlation Coefficient

Dupont De  Home First

Very weak diversification

The 3 months correlation between Dupont and Home is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance 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 Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of Dupont De i.e., Dupont De and Home First go up and down completely randomly.

Pair Corralation between Dupont De and Home First

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.47 times more return on investment than Home First. However, Dupont De Nemours is 2.15 times less risky than Home First. It trades about 0.03 of its potential returns per unit of risk. Home First Finance is currently generating about -0.01 per unit of risk. If you would invest  8,212  in Dupont De Nemours on August 31, 2024 and sell it today you would earn a total of  178.00  from holding Dupont De Nemours or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Dupont De Nemours  vs.  Home First Finance

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Very 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.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Home First is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dupont De and Home First

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

The idea behind Dupont De Nemours and Home First Finance 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.