Correlation Between Dupont Denemours and EQUINOR ASA

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Can any of the company-specific risk be diversified away by investing in both Dupont Denemours and EQUINOR ASA 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 EQUINOR ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont Denemours and EQUINOR ASA, you can compare the effects of market volatilities on Dupont Denemours and EQUINOR ASA 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 EQUINOR ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont Denemours and EQUINOR ASA.

Diversification Opportunities for Dupont Denemours and EQUINOR ASA

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dupont and EQUINOR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dupont Denemours and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA 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 EQUINOR ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUINOR ASA has no effect on the direction of Dupont Denemours i.e., Dupont Denemours and EQUINOR ASA go up and down completely randomly.

Pair Corralation between Dupont Denemours and EQUINOR ASA

Allowing for the 90-day total investment horizon Dupont Denemours is expected to under-perform the EQUINOR ASA. But the stock apears to be less risky and, when comparing its historical volatility, Dupont Denemours is 1.34 times less risky than EQUINOR ASA. The stock trades about -0.11 of its potential returns per unit of risk. The EQUINOR ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,607  in EQUINOR ASA on March 29, 2022 and sell it today you would earn a total of  812.00  from holding EQUINOR ASA or generate 31.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dupont Denemours  vs.  EQUINOR ASA

 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 unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0225
Payout Ratio
0.35
Last Split Factor
4725:10000
Forward Annual Dividend Rate
1.32
Dividend Date
2022-06-15
Ex Dividend Date
2022-05-27
Last Split Date
2019-06-03

Dupont Price Channel

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

Structure and Payout Changes

Forward Annual Dividend Yield
0.0233
Payout Ratio
0.5
Forward Annual Dividend Rate
0.8
Ex Dividend Date
2022-08-11

EQUINOR Price Channel

Dupont Denemours and EQUINOR ASA Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Dupont Denemours and EQUINOR ASA

The main advantage of trading using opposite Dupont Denemours and EQUINOR ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont Denemours position performs unexpectedly, EQUINOR ASA 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 EQUINOR ASA will offset losses from the drop in EQUINOR ASA's long position.
The idea behind Dupont Denemours and EQUINOR ASA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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