Correlation Between Home Depot and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Home Depot and Teradata Corp 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 Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Teradata Corp, you can compare the effects of market volatilities on Home Depot and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Teradata Corp.
Diversification Opportunities for Home Depot and Teradata Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Teradata is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Home Depot i.e., Home Depot and Teradata Corp go up and down completely randomly.
Pair Corralation between Home Depot and Teradata Corp
If you would invest 3,130 in Teradata Corp on November 8, 2024 and sell it today you would earn a total of 8.00 from holding Teradata Corp or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.61% |
| Values | Daily Returns |
Home Depot vs. Teradata Corp
Performance |
| Timeline |
| Home Depot |
| Teradata Corp |
Home Depot and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Teradata Corp
The main advantage of trading using opposite Home Depot and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Home Depot vs. Ebro Foods | Home Depot vs. Tyson Foods Cl | Home Depot vs. Sabre Insurance Group | Home Depot vs. Various Eateries PLC |
| Teradata Corp vs. STMicroelectronics NV | Teradata Corp vs. Roadside Real Estate | Teradata Corp vs. Kaufman Et Broad | Teradata Corp vs. Made Tech Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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