Correlation Between Neinor Homes and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Neinor Homes and HomeToGo 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 Neinor Homes and HomeToGo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and HomeToGo SE, you can compare the effects of market volatilities on Neinor Homes and HomeToGo 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 Neinor Homes with a short position of HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and HomeToGo.
Diversification Opportunities for Neinor Homes and HomeToGo
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Neinor and HomeToGo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Neinor Homes i.e., Neinor Homes and HomeToGo go up and down completely randomly.
Pair Corralation between Neinor Homes and HomeToGo
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.44 times more return on investment than HomeToGo. However, Neinor Homes SA is 2.28 times less risky than HomeToGo. It trades about 0.01 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.13 per unit of risk. If you would invest 1,494 in Neinor Homes SA on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Neinor Homes SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. HomeToGo SE
Performance |
| Timeline |
| Neinor Homes SA |
| HomeToGo SE |
Neinor Homes and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and HomeToGo
The main advantage of trading using opposite Neinor Homes and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc | Neinor Homes vs. Apple Inc |
| HomeToGo vs. Ryanair Holdings plc | HomeToGo vs. SYSTEMAIR AB | HomeToGo vs. Harmony Gold Mining | HomeToGo vs. Westinghouse Air Brake |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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