Correlation Between Dupont De and NetApp

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

Diversification Opportunities for Dupont De and NetApp

0.69

Correlation Coefficient

Dupont De  NetApp

Poor diversification

The 3 months correlation between Dupont and NetApp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc 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 NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Dupont De i.e., Dupont De and NetApp go up and down completely randomly.

Pair Corralation between Dupont De and NetApp

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.96 times more return on investment than NetApp. However, Dupont De Nemours is 1.04 times less risky than NetApp. It trades about -0.03 of its potential returns per unit of risk. NetApp Inc is currently generating about -0.04 per unit of risk. If you would invest  7,372  in Dupont De Nemours on January 19, 2024 and sell it today you would lose (63.00) from holding Dupont De Nemours or give up 0.85% of portfolio value over 90 days.

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

Dupont De Nemours  vs.  NetApp Inc

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.

NetApp Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and NetApp

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

The idea behind Dupont De Nemours and NetApp Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.