Correlation Between Auction Technology and Home Depot
Can any of the company-specific risk be diversified away by investing in both Auction Technology 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 Auction Technology and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Home Depot, you can compare the effects of market volatilities on Auction Technology 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 Auction Technology with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Home Depot.
Diversification Opportunities for Auction Technology and Home Depot
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Auction and Home is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Auction Technology 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 Auction Technology Group 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 Auction Technology i.e., Auction Technology and Home Depot go up and down completely randomly.
Pair Corralation between Auction Technology and Home Depot
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 11.08 times more return on investment than Home Depot. However, Auction Technology is 11.08 times more volatile than Home Depot. It trades about 0.03 of its potential returns per unit of risk. Home Depot is currently generating about 0.08 per unit of risk. If you would invest 52,100 in Auction Technology Group on September 12, 2024 and sell it today you would earn a total of 4,900 from holding Auction Technology Group or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Auction Technology Group vs. Home Depot
Performance |
| Timeline |
| Auction Technology |
| Home Depot |
Auction Technology and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Home Depot
The main advantage of trading using opposite Auction Technology and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology 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.| Auction Technology vs. Home Depot | Auction Technology vs. Chrysalis Investments | Auction Technology vs. Neometals | Auction Technology vs. Coor Service Management |
| Home Depot vs. Tyson Foods Cl | Home Depot vs. Zegona Communications Plc | Home Depot vs. GreenX Metals | Home Depot vs. Gamma Communications 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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