Correlation Between Dupont De and GM
Can any of the company-specific risk be diversified away by investing in both Dupont De and GM 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 GM 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 General Motors, you can compare the effects of market volatilities on Dupont De and GM 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 GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and GM.
Diversification Opportunities for Dupont De and GM
Poor diversification
The 3 months correlation between Dupont and GM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors 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 GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Dupont De i.e., Dupont De and GM go up and down completely randomly.
Pair Corralation between Dupont De and GM
Allowing for the 90-day total investment horizon Dupont De is expected to generate 1.79 times less return on investment than GM. But when comparing it to its historical volatility, Dupont De Nemours is 1.23 times less risky than GM. It trades about 0.17 of its potential returns per unit of risk. General Motors is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,508 in General Motors on January 26, 2024 and sell it today you would earn a total of 1,000.00 from holding General Motors or generate 28.51% 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. General Motors
Performance |
| Timeline |
| Dupont De Nemours |
| General Motors |
Dupont De and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and GM
The main advantage of trading using opposite Dupont De and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |