Correlation Between Home Depot and Roebuck Food
Can any of the company-specific risk be diversified away by investing in both Home Depot and Roebuck Food 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 Roebuck Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Roebuck Food Group, you can compare the effects of market volatilities on Home Depot and Roebuck Food 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 Roebuck Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Roebuck Food.
Diversification Opportunities for Home Depot and Roebuck Food
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Roebuck is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Roebuck Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roebuck Food 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 Roebuck Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roebuck Food Group has no effect on the direction of Home Depot i.e., Home Depot and Roebuck Food go up and down completely randomly.
Pair Corralation between Home Depot and Roebuck Food
Assuming the 90 days trading horizon Home Depot is expected to generate 3.56 times less return on investment than Roebuck Food. But when comparing it to its historical volatility, Home Depot is 9.01 times less risky than Roebuck Food. It trades about 0.09 of its potential returns per unit of risk. Roebuck Food Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Roebuck Food Group on September 12, 2024 and sell it today you would earn a total of 380.00 from holding Roebuck Food Group or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Home Depot vs. Roebuck Food Group
Performance |
| Timeline |
| Home Depot |
| Roebuck Food Group |
Home Depot and Roebuck Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Roebuck Food
The main advantage of trading using opposite Home Depot and Roebuck Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Roebuck Food 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 Roebuck Food will offset losses from the drop in Roebuck Food'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 |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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