Correlation Between Home Depot and Beeks Trading
Can any of the company-specific risk be diversified away by investing in both Home Depot and Beeks Trading 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 Beeks Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Beeks Trading, you can compare the effects of market volatilities on Home Depot and Beeks Trading 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 Beeks Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Beeks Trading.
Diversification Opportunities for Home Depot and Beeks Trading
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Beeks is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks Trading 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 Beeks Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks Trading has no effect on the direction of Home Depot i.e., Home Depot and Beeks Trading go up and down completely randomly.
Pair Corralation between Home Depot and Beeks Trading
Assuming the 90 days trading horizon Home Depot is expected to generate 9.03 times less return on investment than Beeks Trading. But when comparing it to its historical volatility, Home Depot is 9.77 times less risky than Beeks Trading. It trades about 0.22 of its potential returns per unit of risk. Beeks Trading is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 26,800 in Beeks Trading on September 12, 2024 and sell it today you would earn a total of 3,200 from holding Beeks Trading or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Home Depot vs. Beeks Trading
Performance |
| Timeline |
| Home Depot |
| Beeks Trading |
Home Depot and Beeks Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Beeks Trading
The main advantage of trading using opposite Home Depot and Beeks Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Beeks Trading 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 Beeks Trading will offset losses from the drop in Beeks Trading's long position.| Home Depot vs. Tyson Foods Cl | Home Depot vs. Zegona Communications Plc | Home Depot vs. GreenX Metals | Home Depot vs. Gamma Communications PLC |
| Beeks Trading vs. Home Depot | Beeks Trading vs. Chrysalis Investments | Beeks Trading vs. Neometals | Beeks Trading vs. Coor Service Management |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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