Correlation Between Home Depot and Made Tech
Can any of the company-specific risk be diversified away by investing in both Home Depot and Made Tech 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 Made Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Made Tech Group, you can compare the effects of market volatilities on Home Depot and Made Tech 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 Made Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Made Tech.
Diversification Opportunities for Home Depot and Made Tech
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Made is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Made Tech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made Tech 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 Made Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made Tech Group has no effect on the direction of Home Depot i.e., Home Depot and Made Tech go up and down completely randomly.
Pair Corralation between Home Depot and Made Tech
Assuming the 90 days trading horizon Home Depot is expected to generate 15.33 times less return on investment than Made Tech. But when comparing it to its historical volatility, Home Depot is 10.02 times less risky than Made Tech. It trades about 0.06 of its potential returns per unit of risk. Made Tech Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Made Tech Group on September 13, 2024 and sell it today you would earn a total of 625.00 from holding Made Tech Group or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Home Depot vs. Made Tech Group
Performance |
| Timeline |
| Home Depot |
| Made Tech Group |
Home Depot and Made Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Made Tech
The main advantage of trading using opposite Home Depot and Made Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Made Tech 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 Made Tech will offset losses from the drop in Made Tech's long position.| Home Depot vs. Blackstone Loan Financing | Home Depot vs. Southwest Airlines Co | Home Depot vs. Samsung Electronics Co | Home Depot vs. Ameriprise Financial |
| Made Tech vs. Tyson Foods Cl | Made Tech vs. AIM ImmunoTech | Made Tech vs. Supermarket Income REIT | Made Tech vs. Concurrent Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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