Correlation Between Eddy Smart and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Eddy Smart 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 Eddy Smart and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eddy Smart Home and HOME DEPOT CDR, you can compare the effects of market volatilities on Eddy Smart 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 Eddy Smart with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eddy Smart and HOME DEPOT.
Diversification Opportunities for Eddy Smart and HOME DEPOT
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eddy and HOME is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR and Eddy Smart 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 Eddy Smart Home 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 CDR has no effect on the direction of Eddy Smart i.e., Eddy Smart and HOME DEPOT go up and down completely randomly.
Pair Corralation between Eddy Smart and HOME DEPOT
Assuming the 90 days horizon Eddy Smart Home is expected to under-perform the HOME DEPOT. In addition to that, Eddy Smart is 2.03 times more volatile than HOME DEPOT CDR. It trades about -0.27 of its total potential returns per unit of risk. HOME DEPOT CDR is currently generating about -0.24 per unit of volatility. If you would invest 2,695 in HOME DEPOT CDR on November 29, 2024 and sell it today you would lose (190.00) from holding HOME DEPOT CDR or give up 7.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eddy Smart Home vs. HOME DEPOT CDR
Performance |
| Timeline |
| Eddy Smart Home |
| HOME DEPOT CDR |
Eddy Smart and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eddy Smart and HOME DEPOT
The main advantage of trading using opposite Eddy Smart and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eddy Smart 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.| Eddy Smart vs. Simply Better Brands | Eddy Smart vs. Forward Water Technologies | Eddy Smart vs. Pulse Oil Corp | Eddy Smart vs. C3 Metals |
| HOME DEPOT vs. NorthWest Healthcare Properties | HOME DEPOT vs. Jamieson Wellness | HOME DEPOT vs. CVS HEALTH CDR | HOME DEPOT vs. Data Communications Management |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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