Correlation Between Medical Properties and Home Depot
Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and Home Depot, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Home Depot.
Diversification Opportunities for Medical Properties and Home Depot
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medical and Home is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and Home Depot go up and down completely randomly.
Pair Corralation between Medical Properties and Home Depot
Assuming the 90 days trading horizon Medical Properties Trust is expected to under-perform the Home Depot. In addition to that, Medical Properties is 11.07 times more volatile than Home Depot. It trades about -0.1 of its total potential returns per unit of risk. Home Depot is currently generating about 0.22 per unit of volatility. If you would invest 17,632 in Home Depot on September 1, 2024 and sell it today you would earn a total of 225.00 from holding Home Depot or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Medical Properties Trust vs. Home Depot
Performance |
| Timeline |
| Medical Properties Trust |
| Home Depot |
Medical Properties and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Home Depot
The main advantage of trading using opposite Medical Properties and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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.| Medical Properties vs. Cairo Communication SpA | Medical Properties vs. Spirent Communications plc | Medical Properties vs. Zegona Communications Plc | Medical Properties vs. Verizon Communications |
| Home Depot vs. CNH Industrial NV | Home Depot vs. Applied Materials | Home Depot vs. Taiwan Semiconductor Manufacturing | Home Depot vs. Neometals |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |