Correlation Between Dupont De and Furukawa Electric

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

Diversification Opportunities for Dupont De and Furukawa Electric

0.6

Correlation Coefficient

Dupont De  Furukawa Electric

Poor diversification

The 3 months correlation between Dupont and Furukawa is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Furukawa Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Furukawa Electric 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 Furukawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Furukawa Electric has no effect on the direction of Dupont De i.e., Dupont De and Furukawa Electric go up and down completely randomly.

Pair Corralation between Dupont De and Furukawa Electric

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to under-perform the Furukawa Electric. But the stock apears to be less risky and, when comparing its historical volatility, Dupont De Nemours is 1.25 times less risky than Furukawa Electric. The stock trades about 0.0 of its potential returns per unit of risk. The Furukawa Electric Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  936.00  in Furukawa Electric Co on January 24, 2024 and sell it today you would earn a total of  147.00  from holding Furukawa Electric Co or generate 15.71% return on investment over 90 days.

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

Dupont De Nemours  vs.  Furukawa Electric Co

Dupont De Nemours

Risk-Adjusted Performance

13 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Furukawa Electric

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Furukawa Electric Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Furukawa Electric showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Furukawa Electric

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

The idea behind Dupont De Nemours and Furukawa Electric Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..