Correlation Between Focus Home and Home Depot
Can any of the company-specific risk be diversified away by investing in both Focus Home and Home Depot 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 Focus Home and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and The Home Depot, you can compare the effects of market volatilities on Focus Home and Home Depot 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 Focus Home with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Home Depot.
Diversification Opportunities for Focus Home and Home Depot
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Focus and Home is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Focus Home 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 Focus Home Interactive are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Focus Home i.e., Focus Home and Home Depot go up and down completely randomly.
Pair Corralation between Focus Home and Home Depot
Assuming the 90 days horizon Focus Home Interactive is expected to generate 4.39 times more return on investment than Home Depot. However, Focus Home is 4.39 times more volatile than The Home Depot. It trades about 0.11 of its potential returns per unit of risk. The Home Depot is currently generating about 0.1 per unit of risk. If you would invest 1,022 in Focus Home Interactive on October 19, 2024 and sell it today you would earn a total of 1,018 from holding Focus Home Interactive or generate 99.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Focus Home Interactive vs. The Home Depot
Performance |
| Timeline |
| Focus Home Interactive |
| Home Depot |
Focus Home and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and Home Depot
The main advantage of trading using opposite Focus Home and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Focus Home vs. Corporate Office Properties | Focus Home vs. Wayside Technology Group | Focus Home vs. BW OFFSHORE LTD | Focus Home vs. NorAm Drilling AS |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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