Correlation Between Dupont De and Maiden Holdings

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

Diversification Opportunities for Dupont De and Maiden Holdings

0.57

Correlation Coefficient

Dupont De  Maiden Holdings

Very weak diversification

The 3 months correlation between Dupont and Maiden is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings 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 Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Dupont De i.e., Dupont De and Maiden Holdings go up and down completely randomly.

Pair Corralation between Dupont De and Maiden Holdings

Allowing for the 90-day total investment horizon Dupont De is expected to generate 2.43 times less return on investment than Maiden Holdings. But when comparing it to its historical volatility, Dupont De Nemours is 1.8 times less risky than Maiden Holdings. It trades about 0.07 of its potential returns per unit of risk. Maiden Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  211.00  in Maiden Holdings on February 5, 2024 and sell it today you would earn a total of  14.00  from holding Maiden Holdings or generate 6.64% return on investment over 90 days.

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

Dupont De Nemours  vs.  Maiden Holdings

Dupont De Nemours

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maiden Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Maiden Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dupont De and Maiden Holdings

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

The idea behind Dupont De Nemours and Maiden Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.