Correlation Between Dupont De and SP Funds

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

Diversification Opportunities for Dupont De and SP Funds

0.85

Correlation Coefficient

Dupont De  SP Funds

Very poor diversification

The 3 months correlation between Dupont and SPWO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and SP Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Funds Trust 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 SP Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Funds Trust has no effect on the direction of Dupont De i.e., Dupont De and SP Funds go up and down completely randomly.

Pair Corralation between Dupont De and SP Funds

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 1.92 times more return on investment than SP Funds. However, Dupont De is 1.92 times more volatile than SP Funds Trust. It trades about 0.23 of its potential returns per unit of risk. SP Funds Trust is currently generating about 0.42 per unit of risk. If you would invest  5,513  in Dupont De Nemours on February 7, 2025 and sell it today you would earn a total of  943.00  from holding Dupont De Nemours or generate 17.11% return on investment over 90 days.

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

Dupont De Nemours  vs.  SP Funds Trust

Dupont De Nemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dupont De Nemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

SP Funds Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days SP Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, SP Funds is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dupont De and SP Funds

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

The idea behind Dupont De Nemours and SP Funds Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.