Correlation Between Dupont Denemours and Companhia Brasileira

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dupont Denemours and Companhia Brasileira 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 Denemours and Companhia Brasileira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont Denemours and Companhia Brasileira DE, you can compare the effects of market volatilities on Dupont Denemours and Companhia Brasileira 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 Denemours with a short position of Companhia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont Denemours and Companhia Brasileira.

Diversification Opportunities for Dupont Denemours and Companhia Brasileira

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Dupont and Companhia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dupont Denemours and Companhia Brasileira DE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Brasileira and Dupont Denemours 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 Denemours are associated (or correlated) with Companhia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Brasileira has no effect on the direction of Dupont Denemours i.e., Dupont Denemours and Companhia Brasileira go up and down completely randomly.

Pair Corralation between Dupont Denemours and Companhia Brasileira

Allowing for the 90-day total investment horizon Dupont Denemours is expected to generate 0.61 times more return on investment than Companhia Brasileira. However, Dupont Denemours is 1.65 times less risky than Companhia Brasileira. It trades about -0.06 of its potential returns per unit of risk. Companhia Brasileira DE is currently generating about -0.11 per unit of risk. If you would invest  6,318  in Dupont Denemours on May 11, 2022 and sell it today you would lose (385.00)  from holding Dupont Denemours or give up 6.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy97.56%
ValuesDaily Returns

Dupont Denemours  vs.  Companhia Brasileira DE

 Performance (%) 
       Timeline  
Dupont Denemours 
Dupont Performance
0 of 100
Over the last 90 days Dupont Denemours has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dupont Denemours is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dupont Price Channel

Companhia Brasileira 
Companhia Performance
0 of 100
Over the last 90 days Companhia Brasileira DE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in September 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Companhia Price Channel

Dupont Denemours and Companhia Brasileira Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dupont Denemours and Companhia Brasileira

The main advantage of trading using opposite Dupont Denemours and Companhia Brasileira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont Denemours position performs unexpectedly, Companhia Brasileira 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 Companhia Brasileira will offset losses from the drop in Companhia Brasileira's long position.
The idea behind Dupont Denemours and Companhia Brasileira DE 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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

Other Complementary Tools

Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go