Correlation Between Dupont De and Illumina

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

Diversification Opportunities for Dupont De and Illumina

0.31

Correlation Coefficient

Dupont De  Illumina

Weak diversification

The 3 months correlation between Dupont and Illumina is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Dupont De i.e., Dupont De and Illumina go up and down completely randomly.

Pair Corralation between Dupont De and Illumina

Allowing for the 90-day total investment horizon Dupont De is expected to generate 58.43 times less return on investment than Illumina. But when comparing it to its historical volatility, Dupont De Nemours is 1.64 times less risky than Illumina. It trades about 0.0 of its potential returns per unit of risk. Illumina is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13,140  in Illumina on August 30, 2024 and sell it today you would earn a total of  1,296  from holding Illumina or generate 9.86% 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.  Illumina

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

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.

Illumina

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Illumina may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Dupont De and Illumina

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

The idea behind Dupont De Nemours and Illumina 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.