Correlation Between Lsb Industries and Dupont De
Can any of the company-specific risk be diversified away by investing in both Lsb Industries and Dupont De 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 Lsb Industries and Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Dupont De Nemours, you can compare the effects of market volatilities on Lsb Industries and Dupont De 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 Lsb Industries with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Dupont De.
Diversification Opportunities for Lsb Industries and Dupont De
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lsb and Dupont is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours and Lsb Industries 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 Lsb Industries are associated (or correlated) with Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Lsb Industries i.e., Lsb Industries and Dupont De go up and down completely randomly.
Pair Corralation between Lsb Industries and Dupont De
Considering the 90-day investment horizon Lsb Industries is expected to generate 2.14 times more return on investment than Dupont De. However, Lsb Industries is 2.14 times more volatile than Dupont De Nemours. It trades about 0.06 of its potential returns per unit of risk. Dupont De Nemours is currently generating about -0.03 per unit of risk. If you would invest 775.00 in Lsb Industries on January 19, 2024 and sell it today you would earn a total of 20.00 from holding Lsb Industries or generate 2.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.65% |
Values | Daily Returns |
Lsb Industries vs. Dupont De Nemours
Performance |
Timeline |
Lsb Industries |
Dupont De Nemours |
Lsb Industries and Dupont De Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lsb Industries and Dupont De
The main advantage of trading using opposite Lsb Industries and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries position performs unexpectedly, Dupont De 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 Dupont De will offset losses from the drop in Dupont De's long position.Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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