Correlation Between Home Depot and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both Home Depot and Rockfire Resources 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 Rockfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Rockfire Resources plc, you can compare the effects of market volatilities on Home Depot and Rockfire Resources 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 Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Rockfire Resources.
Diversification Opportunities for Home Depot and Rockfire Resources
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Rockfire is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources 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 Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of Home Depot i.e., Home Depot and Rockfire Resources go up and down completely randomly.
Pair Corralation between Home Depot and Rockfire Resources
If you would invest 17,632 in Home Depot on September 4, 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 | 95.24% |
| Values | Daily Returns |
Home Depot vs. Rockfire Resources plc
Performance |
| Timeline |
| Home Depot |
| Rockfire Resources plc |
Home Depot and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Rockfire Resources
The main advantage of trading using opposite Home Depot and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Rockfire Resources 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 Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| Home Depot vs. Chocoladefabriken Lindt Spruengli | Home Depot vs. National Atomic Co | Home Depot vs. OTP Bank Nyrt | Home Depot vs. Samsung Electronics Co |
| Rockfire Resources vs. JB Hunt Transport | Rockfire Resources vs. Alliance Data Systems | Rockfire Resources vs. Gaztransport et Technigaz | Rockfire Resources vs. Cincinnati Financial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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