Correlation Between Home Depot and MT Bank
Can any of the company-specific risk be diversified away by investing in both Home Depot and MT Bank 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 Home Depot and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and MT Bank Corp, you can compare the effects of market volatilities on Home Depot and MT Bank 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 Home Depot with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and MT Bank.
Diversification Opportunities for Home Depot and MT Bank
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and 0JW2 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Home Depot 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 Home Depot are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Home Depot i.e., Home Depot and MT Bank go up and down completely randomly.
Pair Corralation between Home Depot and MT Bank
If you would invest 17,857 in Home Depot on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Home Depot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Home Depot vs. MT Bank Corp
Performance |
| Timeline |
| Home Depot |
| MT Bank Corp |
Home Depot and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and MT Bank
The main advantage of trading using opposite Home Depot and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Home Depot vs. Diversified Energy | Home Depot vs. Herald Investment Trust | Home Depot vs. Batm Advanced Communications | Home Depot vs. Monks Investment Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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