Correlation Between Dupont De and Blue Line

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

Diversification Opportunities for Dupont De and Blue Line

-0.25

Correlation Coefficient

Dupont De  Blue Line

Very good diversification

The 3 months correlation between Dupont and Blue is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection 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 Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of Dupont De i.e., Dupont De and Blue Line go up and down completely randomly.

Pair Corralation between Dupont De and Blue Line

Allowing for the 90-day total investment horizon Dupont De is expected to generate 17.72 times less return on investment than Blue Line. But when comparing it to its historical volatility, Dupont De Nemours is 12.54 times less risky than Blue Line. It trades about 0.06 of its potential returns per unit of risk. Blue Line Protection is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Blue Line Protection on February 3, 2024 and sell it today you would lose (8.20) from holding Blue Line Protection or give up 51.25% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  Blue Line Protection

Dupont De Nemours

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Blue Line Protection

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Line Protection are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blue Line reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Blue Line

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

The idea behind Dupont De Nemours and Blue Line Protection 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.