Correlation Between Home Depot and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Home Depot and Ceres Power 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 Ceres Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Ceres Power Holdings, you can compare the effects of market volatilities on Home Depot and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Ceres Power.
Diversification Opportunities for Home Depot and Ceres Power
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Ceres is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Home Depot i.e., Home Depot and Ceres Power go up and down completely randomly.
Pair Corralation between Home Depot and Ceres Power
Assuming the 90 days trading horizon Home Depot is expected to generate 0.11 times more return on investment than Ceres Power. However, Home Depot is 9.07 times less risky than Ceres Power. It trades about 0.22 of its potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.08 per unit of risk. If you would invest 17,632 in Home Depot on September 12, 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 | 91.3% |
| Values | Daily Returns |
Home Depot vs. Ceres Power Holdings
Performance |
| Timeline |
| Home Depot |
| Ceres Power Holdings |
Home Depot and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Ceres Power
The main advantage of trading using opposite Home Depot and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| Home Depot vs. National Atomic Co | Home Depot vs. OTP Bank Nyrt | Home Depot vs. Samsung Electronics Co | Home Depot vs. Samsung Electronics Co |
| Ceres Power vs. Anglesey Mining | Ceres Power vs. Sabre Insurance Group | Ceres Power vs. Endeavour Mining Corp | Ceres Power vs. United Utilities 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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