Correlation Between Home Depot and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Home Depot and AMG Advanced 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 AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Home Depot and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and AMG Advanced.
Diversification Opportunities for Home Depot and AMG Advanced
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and AMG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Home Depot i.e., Home Depot and AMG Advanced go up and down completely randomly.
Pair Corralation between Home Depot and AMG Advanced
If you would invest 1,413 in AMG Advanced Metallurgical on November 3, 2024 and sell it today you would lose (20.00) from holding AMG Advanced Metallurgical or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Home Depot |
| AMG Advanced Metallu |
Home Depot and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and AMG Advanced
The main advantage of trading using opposite Home Depot and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Home Depot vs. Amedeo Air Four | Home Depot vs. Norwegian Air Shuttle | Home Depot vs. Wizz Air Holdings | Home Depot vs. Ryanair Holdings plc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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