Correlation Between Dupont De and Electronic Systems

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

Diversification Opportunities for Dupont De and Electronic Systems

-0.03

Correlation Coefficient

Dupont De  Electronic Systems

Good diversification

The 3 months correlation between Dupont and Electronic is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Electronic Systems Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Systems 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 Electronic Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Systems has no effect on the direction of Dupont De i.e., Dupont De and Electronic Systems go up and down completely randomly.

Pair Corralation between Dupont De and Electronic Systems

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.23 times less return on investment than Electronic Systems. But when comparing it to its historical volatility, Dupont De Nemours is 3.39 times less risky than Electronic Systems. It trades about 0.05 of its potential returns per unit of risk. Electronic Systems Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Electronic Systems Technology on March 11, 2024 and sell it today you would earn a total of  3.00  from holding Electronic Systems Technology or generate 12.0% return on investment over 90 days.

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

Dupont De Nemours  vs.  Electronic Systems Technology

Dupont De Nemours

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Dupont De may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Electronic Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Systems Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Electronic Systems is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dupont De and Electronic Systems

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

The idea behind Dupont De Nemours and Electronic Systems Technology 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.