Correlation Between DGTL Holdings and Home Depot
Can any of the company-specific risk be diversified away by investing in both DGTL Holdings 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 DGTL Holdings and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DGTL Holdings and Home Depot, you can compare the effects of market volatilities on DGTL Holdings 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 DGTL Holdings with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGTL Holdings and Home Depot.
Diversification Opportunities for DGTL Holdings and Home Depot
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between DGTL and Home is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and DGTL Holdings 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 DGTL Holdings 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 DGTL Holdings i.e., DGTL Holdings and Home Depot go up and down completely randomly.
Pair Corralation between DGTL Holdings and Home Depot
Assuming the 90 days horizon DGTL Holdings is expected to generate 54.04 times more return on investment than Home Depot. However, DGTL Holdings is 54.04 times more volatile than Home Depot. It trades about 0.09 of its potential returns per unit of risk. Home Depot is currently generating about 0.05 per unit of risk. If you would invest 42.00 in DGTL Holdings on September 13, 2024 and sell it today you would lose (41.40) from holding DGTL Holdings or give up 98.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
DGTL Holdings vs. Home Depot
Performance |
| Timeline |
| DGTL Holdings |
| Home Depot |
DGTL Holdings and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DGTL Holdings and Home Depot
The main advantage of trading using opposite DGTL Holdings and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DGTL Holdings 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.| DGTL Holdings vs. Tinybeans Group Limited | DGTL Holdings vs. Sabio Holdings | DGTL Holdings vs. Zoomd Technologies | DGTL Holdings vs. Quizam Media |
| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
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 Stocks Directory module to find actively traded stocks across global markets.
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