Correlation Between FutureFuel Corp and Dupont De

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

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

Diversification Opportunities for FutureFuel Corp and Dupont De

0.81

Correlation Coefficient

FutureFuel Corp  Dupont De

Very poor diversification

The 3 months correlation between FutureFuel and Dupont is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp 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 FutureFuel Corp 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 FutureFuel Corp 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 FutureFuel Corp i.e., FutureFuel Corp and Dupont De go up and down completely randomly.

Pair Corralation between FutureFuel Corp and Dupont De

Allowing for the 90-day total investment horizon FutureFuel Corp is expected to generate 3.38 times less return on investment than Dupont De. But when comparing it to its historical volatility, FutureFuel Corp is 1.15 times less risky than Dupont De. It trades about 0.1 of its potential returns per unit of risk. Dupont De Nemours is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  6,011  in Dupont De Nemours on February 18, 2025 and sell it today you would earn a total of  869.50  from holding Dupont De Nemours or generate 14.47% return on investment over 90 days.

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

FutureFuel Corp  vs.  Dupont De Nemours

FutureFuel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FutureFuel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FutureFuel Corp and Dupont De

The main advantage of trading using opposite FutureFuel Corp and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp 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 FutureFuel Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.