Correlation Between Home Depot and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both Home Depot and Aurora Investment 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 Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Aurora Investment Trust, you can compare the effects of market volatilities on Home Depot and Aurora Investment 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 Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Aurora Investment.
Diversification Opportunities for Home Depot and Aurora Investment
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Aurora is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust 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 Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Home Depot i.e., Home Depot and Aurora Investment go up and down completely randomly.
Pair Corralation between Home Depot and Aurora Investment
Assuming the 90 days trading horizon Home Depot is expected to generate 0.23 times more return on investment than Aurora Investment. However, Home Depot is 4.31 times less risky than Aurora Investment. It trades about 0.21 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about -0.21 per unit of risk. If you would invest 17,632 in Home Depot on August 31, 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 | 100.0% |
| Values | Daily Returns |
Home Depot vs. Aurora Investment Trust
Performance |
| Timeline |
| Home Depot |
| Aurora Investment Trust |
Home Depot and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Aurora Investment
The main advantage of trading using opposite Home Depot and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Aurora Investment 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 Aurora Investment will offset losses from the drop in Aurora Investment's long position.| Home Depot vs. Berkshire Hathaway | Home Depot vs. Hyundai Motor | Home Depot vs. Samsung Electronics Co | Home Depot vs. Samsung Electronics Co |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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