Correlation Between Sparebank and Home Depot
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Home Depot, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Home Depot.
Diversification Opportunities for Sparebank and Home Depot
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sparebank and Home is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Sparebank 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 Sparebank 1 SR 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 Sparebank i.e., Sparebank and Home Depot go up and down completely randomly.
Pair Corralation between Sparebank and Home Depot
If you would invest 15,620 in Sparebank 1 SR on November 28, 2024 and sell it today you would earn a total of 330.00 from holding Sparebank 1 SR or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Home Depot
Performance |
| Timeline |
| Sparebank 1 SR |
| Home Depot |
Sparebank and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Home Depot
The main advantage of trading using opposite Sparebank and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Pfeiffer Vacuum Technology | Sparebank vs. Monster Beverage Corp | Sparebank vs. Bytes Technology | Sparebank vs. Software Circle plc |
| Home Depot vs. Jade Road Investments | Home Depot vs. Tatton Asset Management | Home Depot vs. Mobius Investment Trust | Home Depot vs. Litigation Capital Management |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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