Correlation Between Home Depot and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Home Depot and Eneraqua Technologies 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 Eneraqua Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Eneraqua Technologies PLC, you can compare the effects of market volatilities on Home Depot and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Eneraqua Technologies.
Diversification Opportunities for Home Depot and Eneraqua Technologies
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Eneraqua is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies PLC 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Home Depot i.e., Home Depot and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Home Depot and Eneraqua Technologies
Assuming the 90 days trading horizon Home Depot is expected to generate 0.07 times more return on investment than Eneraqua Technologies. However, Home Depot is 15.0 times less risky than Eneraqua Technologies. It trades about 0.13 of its potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about 0.0 per unit of risk. If you would invest 17,410 in Home Depot on October 26, 2024 and sell it today you would earn a total of 447.00 from holding Home Depot or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Home Depot vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Home Depot |
| Eneraqua Technologies PLC |
Home Depot and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Eneraqua Technologies
The main advantage of trading using opposite Home Depot and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| Home Depot vs. Samsung Electronics Co | Home Depot vs. Samsung Electronics Co | Home Depot vs. Toyota Motor Corp | Home Depot vs. SoftBank Group Corp |
| Eneraqua Technologies vs. Beazer Homes USA | Eneraqua Technologies vs. Home Depot | Eneraqua Technologies vs. HCA Healthcare | Eneraqua Technologies vs. UNIQA Insurance 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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