Correlation Between Dupont De and GATX

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

Diversification Opportunities for Dupont De and GATX

0.59

Correlation Coefficient

Dupont De  GATX

Very weak diversification

The 3 months correlation between Dupont and GATX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX 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 GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of Dupont De i.e., Dupont De and GATX go up and down completely randomly.

Pair Corralation between Dupont De and GATX

Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.12 times less return on investment than GATX. In addition to that, Dupont De is 1.14 times more volatile than GATX Corporation. It trades about 0.03 of its total potential returns per unit of risk. GATX Corporation is currently generating about 0.03 per unit of volatility. If you would invest  10,368  in GATX Corporation on January 25, 2024 and sell it today you would earn a total of  2,244  from holding GATX Corporation or generate 21.64% return on investment over 90 days.

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

Dupont De Nemours  vs.  GATX Corp.

Dupont De Nemours

Risk-Adjusted Performance

13 of 100

Good

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.

GATX

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and GATX

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

The idea behind Dupont De Nemours and GATX Corporation 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.