Correlation Between Air Products and Dupont De

Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Products and and Dupont De Nemours, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Dupont De.

Diversification Opportunities for Air Products and Dupont De

0.31

Correlation Coefficient

Air Products  Dupont De

Weak diversification

The 3 months correlation between Air and Dupont is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and 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 Air Products 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 Air Products and 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 Air Products i.e., Air Products and Dupont De go up and down completely randomly.

Pair Corralation between Air Products and Dupont De

Considering the 90-day investment horizon Air Products is expected to generate 1.73 times less return on investment than Dupont De. But when comparing it to its historical volatility, Air Products and is 1.05 times less risky than Dupont De. It trades about 0.02 of its potential returns per unit of risk. Dupont De Nemours is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,158  in Dupont De Nemours on February 5, 2024 and sell it today you would earn a total of  1,609  from holding Dupont De Nemours or generate 26.13% return on investment over 90 days.

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

Air Products and  vs.  Dupont De Nemours

Air Products

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Air Products exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dupont De Nemours

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 18 (%) 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.

Pair Trading with Air Products and Dupont De

The main advantage of trading using opposite Air Products and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.

The idea behind Air Products and and Dupont De Nemours 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.