Correlation Between Home Depot and Creo Medical
Can any of the company-specific risk be diversified away by investing in both Home Depot and Creo Medical 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 Creo Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Creo Medical Group, you can compare the effects of market volatilities on Home Depot and Creo Medical 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 Creo Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Creo Medical.
Diversification Opportunities for Home Depot and Creo Medical
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Creo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Creo Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creo Medical 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 Creo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creo Medical Group has no effect on the direction of Home Depot i.e., Home Depot and Creo Medical go up and down completely randomly.
Pair Corralation between Home Depot and Creo Medical
Assuming the 90 days trading horizon Home Depot is expected to generate 0.12 times more return on investment than Creo Medical. However, Home Depot is 8.02 times less risky than Creo Medical. It trades about 0.21 of its potential returns per unit of risk. Creo Medical Group is currently generating about -0.45 per unit of risk. If you would invest 17,632 in Home Depot on August 31, 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 | 100.0% |
| Values | Daily Returns |
Home Depot vs. Creo Medical Group
Performance |
| Timeline |
| Home Depot |
| Creo Medical Group |
Home Depot and Creo Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Creo Medical
The main advantage of trading using opposite Home Depot and Creo Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Creo Medical 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 Creo Medical will offset losses from the drop in Creo Medical's long position.| Home Depot vs. Toyota Motor Corp | Home Depot vs. SoftBank Group Corp | Home Depot vs. OTP Bank Nyrt | Home Depot vs. Las Vegas Sands |
| Creo Medical vs. Premier Foods PLC | Creo Medical vs. Leroy Seafood Group | Creo Medical vs. Scandic Hotels Group | Creo Medical vs. Trainline Plc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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