Correlation Between Celanese and Dupont De
Can any of the company-specific risk be diversified away by investing in both Celanese 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 Celanese and Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and Dupont De Nemours, you can compare the effects of market volatilities on Celanese 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 Celanese with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and Dupont De.
Diversification Opportunities for Celanese and Dupont De
Very poor diversification
The 3 months correlation between Celanese and Dupont is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Celanese 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 Celanese 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 Celanese 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 Celanese i.e., Celanese and Dupont De go up and down completely randomly.
Pair Corralation between Celanese and Dupont De
Allowing for the 90-day total investment horizon Celanese is expected to generate 1.97 times less return on investment than Dupont De. In addition to that, Celanese is 1.12 times more volatile than Dupont De Nemours. It trades about 0.08 of its total potential returns per unit of risk. Dupont De Nemours is currently generating about 0.17 per unit of volatility. If you would invest 6,432 in Dupont De Nemours on January 26, 2024 and sell it today you would earn a total of 964.00 from holding Dupont De Nemours or generate 14.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Celanese vs. Dupont De Nemours
Performance |
Timeline |
Celanese |
Dupont De Nemours |
Celanese and Dupont De Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Celanese and Dupont De
The main advantage of trading using opposite Celanese and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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 Celanese 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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