Correlation Between Dupont De and F5 Networks

Can any of the company-specific risk be diversified away by investing in both Dupont De and F5 Networks 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 F5 Networks 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 F5 Networks, you can compare the effects of market volatilities on Dupont De and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and F5 Networks.

Diversification Opportunities for Dupont De and F5 Networks

-0.12

Correlation Coefficient

Dupont De  F5 Networks

Good diversification

The 3 months correlation between Dupont and FFIV is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Dupont De i.e., Dupont De and F5 Networks go up and down completely randomly.

Pair Corralation between Dupont De and F5 Networks

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.88 times more return on investment than F5 Networks. However, Dupont De Nemours is 1.14 times less risky than F5 Networks. It trades about 0.06 of its potential returns per unit of risk. F5 Networks is currently generating about -0.2 per unit of risk. If you would invest  7,628  in Dupont De Nemours on February 8, 2024 and sell it today you would earn a total of  193.00  from holding Dupont De Nemours or generate 2.53% 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.  F5 Networks

Dupont De Nemours

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

F5 Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days F5 Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Dupont De and F5 Networks

The main advantage of trading using opposite Dupont De and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind Dupont De Nemours and F5 Networks 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.