Correlation Between Canfor and Dupont De

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

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

Diversification Opportunities for Canfor and Dupont De

0.87

Correlation Coefficient

Canfor  Dupont De

Very poor diversification

The 3 months correlation between Canfor and Dupont is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Canfor 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 Canfor 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 Canfor 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 Canfor i.e., Canfor and Dupont De go up and down completely randomly.

Pair Corralation between Canfor and Dupont De

Assuming the 90 days horizon Canfor is expected to generate 8.29 times less return on investment than Dupont De. In addition to that, Canfor is 1.69 times more volatile than Dupont De Nemours. It trades about 0.01 of its total potential returns per unit of risk. Dupont De Nemours is currently generating about 0.12 per unit of volatility. If you would invest  6,258  in Dupont De Nemours on July 25, 2024 and sell it today you would earn a total of  2,181  from holding Dupont De Nemours or generate 34.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.47%
Values	Daily Returns

Canfor  vs.  Dupont De Nemours

Canfor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canfor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Canfor reported solid returns over the last few months and may actually be approaching a breakup point.

Dupont De Nemours

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Dupont De may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Canfor and Dupont De

The main advantage of trading using opposite Canfor and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canfor 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 Canfor 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.