Correlation Between Home Depot and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both Home Depot and Evolution Gaming 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 Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Evolution Gaming Group, you can compare the effects of market volatilities on Home Depot and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Evolution Gaming.
Diversification Opportunities for Home Depot and Evolution Gaming
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Evolution is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Home Depot i.e., Home Depot and Evolution Gaming go up and down completely randomly.
Pair Corralation between Home Depot and Evolution Gaming
Assuming the 90 days trading horizon Home Depot is expected to generate 0.18 times more return on investment than Evolution Gaming. However, Home Depot is 5.58 times less risky than Evolution Gaming. It trades about 0.22 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.21 per unit of risk. If you would invest 17,632 in Home Depot on September 22, 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Home Depot vs. Evolution Gaming Group
Performance |
| Timeline |
| Home Depot |
| Evolution Gaming |
Home Depot and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Evolution Gaming
The main advantage of trading using opposite Home Depot and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.| Home Depot vs. GoldMining | Home Depot vs. Park Hotels Resorts | Home Depot vs. AfriTin Mining | Home Depot vs. iShares Physical Silver |
| Evolution Gaming vs. Home Depot | Evolution Gaming vs. Datalogic | Evolution Gaming vs. Datagroup SE | Evolution Gaming vs. Ashtead Technology Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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