Correlation Between Dupont De and Multi Manager

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

Diversification Opportunities for Dupont De and Multi Manager

0.34

Correlation Coefficient

Dupont De  Multi Manager

Weak diversification

The 3 months correlation between Dupont and Multi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Multi Manager Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Inv 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 Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Inv has no effect on the direction of Dupont De i.e., Dupont De and Multi Manager go up and down completely randomly.

Pair Corralation between Dupont De and Multi Manager

Allowing for the 90-day total investment horizon Dupont De is expected to generate 14.38 times less return on investment than Multi Manager. But when comparing it to its historical volatility, Dupont De Nemours is 1.13 times less risky than Multi Manager. It trades about 0.01 of its potential returns per unit of risk. Multi Manager Inv is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  12,960  in Multi Manager Inv on January 19, 2024 and sell it today you would earn a total of  1,750  from holding Multi Manager Inv or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	21.54%
Values	Daily Returns

Dupont De Nemours  vs.  Multi Manager Inv

Dupont De Nemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Multi Manager Inv

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Multi Manager Inv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak essential indicators, Multi Manager sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Multi Manager

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

The idea behind Dupont De Nemours and Multi Manager Inv 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..