Correlation Between Aedas Homes and Home Depot
Can any of the company-specific risk be diversified away by investing in both Aedas Homes and Home Depot 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 Aedas Homes and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and The Home Depot, you can compare the effects of market volatilities on Aedas Homes and Home Depot 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 Aedas Homes with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and Home Depot.
Diversification Opportunities for Aedas Homes and Home Depot
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aedas and Home is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Aedas 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 Aedas Homes SA are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Aedas Homes i.e., Aedas Homes and Home Depot go up and down completely randomly.
Pair Corralation between Aedas Homes and Home Depot
Assuming the 90 days horizon Aedas Homes SA is expected to generate 1.85 times more return on investment than Home Depot. However, Aedas Homes is 1.85 times more volatile than The Home Depot. It trades about 0.16 of its potential returns per unit of risk. The Home Depot is currently generating about -0.17 per unit of risk. If you would invest 2,382 in Aedas Homes SA on October 16, 2024 and sell it today you would earn a total of 143.00 from holding Aedas Homes SA or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aedas Homes SA vs. The Home Depot
Performance |
| Timeline |
| Aedas Homes SA |
| Home Depot |
Aedas Homes and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aedas Homes and Home Depot
The main advantage of trading using opposite Aedas Homes and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Aedas Homes vs. RELIANCE STEEL AL | Aedas Homes vs. TRAVEL LEISURE DL 01 | Aedas Homes vs. Playmates Toys Limited | Aedas Homes vs. DONGJIANG ENVIRONMENTAL H |
| Home Depot vs. PLAY2CHILL SA ZY | Home Depot vs. ADDUS HOMECARE | Home Depot vs. PLAYTIKA HOLDING DL 01 | Home Depot vs. Aedas Homes SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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