Correlation Between Dupont De and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Dupont De and Agricultural Bank 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 Agricultural Bank 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 Agricultural Bank of, you can compare the effects of market volatilities on Dupont De and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Agricultural Bank.
Diversification Opportunities for Dupont De and Agricultural Bank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dupont and Agricultural is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Dupont De i.e., Dupont De and Agricultural Bank go up and down completely randomly.
Pair Corralation between Dupont De and Agricultural Bank
Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Agricultural Bank. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.26 times less risky than Agricultural Bank. The stock trades about -0.09 of its potential returns per unit of risk. The Agricultural Bank of is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Agricultural Bank of on January 26, 2024 and sell it today you would earn a total of 80.00 from holding Agricultural Bank of or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dupont De Nemours vs. Agricultural Bank of
Performance |
| Timeline |
| Dupont De Nemours |
| Agricultural Bank |
Dupont De and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Agricultural Bank
The main advantage of trading using opposite Dupont De and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.The idea behind Dupont De Nemours and Agricultural Bank of 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.| Agricultural Bank vs. ANZ Group Holdings | Agricultural Bank vs. Bank of America | Agricultural Bank vs. Bank of America | Agricultural Bank vs. Wells Fargo |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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