Correlation Between Dupont De and Automatic Data

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

Diversification Opportunities for Dupont De and Automatic Data

-0.13

Correlation Coefficient

Dupont De  Automatic Data

Good diversification

The 3 months correlation between Dupont and Automatic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Dupont De i.e., Dupont De and Automatic Data go up and down completely randomly.

Pair Corralation between Dupont De and Automatic Data

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.73 times more return on investment than Automatic Data. However, Dupont De is 1.73 times more volatile than Automatic Data Processing. It trades about 0.12 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of risk. If you would invest  6,566  in Dupont De Nemours on May 1, 2025 and sell it today you would earn a total of  864.00  from holding Dupont De Nemours or generate 13.16% return on investment over 90 days.

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

Dupont De Nemours  vs.  Automatic Data Processing

Dupont De Nemours

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 9 (%) 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.

Automatic Data Processing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Dupont De and Automatic Data

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

The idea behind Dupont De Nemours and Automatic Data Processing 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.