Correlation Between Home Depot and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both Home Depot and PPHE Hotel 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 PPHE Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and PPHE Hotel Group, you can compare the effects of market volatilities on Home Depot and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and PPHE Hotel.
Diversification Opportunities for Home Depot and PPHE Hotel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and PPHE is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of Home Depot i.e., Home Depot and PPHE Hotel go up and down completely randomly.
Pair Corralation between Home Depot and PPHE Hotel
If you would invest 17,857 in Home Depot on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Home Depot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Home Depot vs. PPHE Hotel Group
Performance |
| Timeline |
| Home Depot |
| PPHE Hotel Group |
Home Depot and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and PPHE Hotel
The main advantage of trading using opposite Home Depot and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| Home Depot vs. First Class Metals | Home Depot vs. Wizz Air Holdings | Home Depot vs. Eastinco Mining Exploration | Home Depot vs. Air Products Chemicals |
| PPHE Hotel vs. Home Depot | PPHE Hotel vs. Aeorema Communications Plc | PPHE Hotel vs. Cairo Communication SpA | PPHE Hotel vs. Zoom Video Communications |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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