Correlation Between Home Depot and Batm Advanced
Can any of the company-specific risk be diversified away by investing in both Home Depot and Batm Advanced 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 Batm Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Batm Advanced Communications, you can compare the effects of market volatilities on Home Depot and Batm Advanced 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 Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Batm Advanced.
Diversification Opportunities for Home Depot and Batm Advanced
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Batm is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Home Depot i.e., Home Depot and Batm Advanced go up and down completely randomly.
Pair Corralation between Home Depot and Batm Advanced
Assuming the 90 days trading horizon Home Depot is expected to generate 0.1 times more return on investment than Batm Advanced. However, Home Depot is 10.37 times less risky than Batm Advanced. It trades about 0.07 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.01 per unit of risk. If you would invest 16,974 in Home Depot on November 3, 2024 and sell it today you would earn a total of 883.00 from holding Home Depot or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Home Depot vs. Batm Advanced Communications
Performance |
| Timeline |
| Home Depot |
| Batm Advanced Commun |
Home Depot and Batm Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Batm Advanced
The main advantage of trading using opposite Home Depot and Batm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Batm Advanced 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 Batm Advanced will offset losses from the drop in Batm Advanced's long position.| Home Depot vs. Martin Marietta Materials | Home Depot vs. Aeorema Communications Plc | Home Depot vs. Geely Automobile Holdings | Home Depot vs. Morgan Advanced Materials |
| Batm Advanced vs. Eastinco Mining Exploration | Batm Advanced vs. Fulcrum Metals PLC | Batm Advanced vs. European Metals Holdings | Batm Advanced vs. Endeavour Mining Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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