Correlation Between IShares GovernmentCredit and Dupont De

Can any of the company-specific risk be diversified away by investing in both IShares GovernmentCredit and Dupont De 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 IShares GovernmentCredit and Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares GovernmentCredit Bond and Dupont De Nemours, you can compare the effects of market volatilities on IShares GovernmentCredit and Dupont De 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 IShares GovernmentCredit with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares GovernmentCredit and Dupont De.

Diversification Opportunities for IShares GovernmentCredit and Dupont De

0.06

Correlation Coefficient

IShares GovernmentCredit  Dupont De

Significant diversification

The 3 months correlation between IShares and Dupont is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding iShares GovernmentCredit Bond and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours and IShares GovernmentCredit 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 iShares GovernmentCredit Bond are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of IShares GovernmentCredit i.e., IShares GovernmentCredit and Dupont De go up and down completely randomly.

Pair Corralation between IShares GovernmentCredit and Dupont De

Considering the 90-day investment horizon IShares GovernmentCredit is expected to generate 2.22 times less return on investment than Dupont De. But when comparing it to its historical volatility, iShares GovernmentCredit Bond is 4.03 times less risky than Dupont De. It trades about 0.16 of its potential returns per unit of risk. Dupont De Nemours is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,892  in Dupont De Nemours on March 8, 2024 and sell it today you would earn a total of  170.00  from holding Dupont De Nemours or generate 2.15% return on investment over 90 days.

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

iShares GovernmentCredit Bond  vs.  Dupont De Nemours

IShares GovernmentCredit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares GovernmentCredit Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, IShares GovernmentCredit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dupont De Nemours

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares GovernmentCredit and Dupont De

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

The idea behind iShares GovernmentCredit Bond and Dupont De Nemours 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.