Correlation Between Enghouse Systems and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Enghouse Systems 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 Enghouse Systems and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enghouse Systems and HOME DEPOT CDR, you can compare the effects of market volatilities on Enghouse Systems 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 Enghouse Systems with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enghouse Systems and HOME DEPOT.
Diversification Opportunities for Enghouse Systems and HOME DEPOT
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enghouse and HOME is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Enghouse Systems 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 Enghouse Systems 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 Enghouse Systems 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 Enghouse Systems i.e., Enghouse Systems and HOME DEPOT go up and down completely randomly.
Pair Corralation between Enghouse Systems and HOME DEPOT
Assuming the 90 days trading horizon Enghouse Systems is expected to under-perform the HOME DEPOT. In addition to that, Enghouse Systems is 1.0 times more volatile than HOME DEPOT CDR. It trades about -0.13 of its total potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.18 per unit of volatility. If you would invest 2,605 in HOME DEPOT CDR on August 28, 2024 and sell it today you would earn a total of 163.00 from holding HOME DEPOT CDR or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enghouse Systems vs. HOME DEPOT CDR
Performance |
| Timeline |
| Enghouse Systems |
| HOME DEPOT CDR |
Enghouse Systems and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enghouse Systems and HOME DEPOT
The main advantage of trading using opposite Enghouse Systems and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enghouse Systems 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.| Enghouse Systems vs. Kinaxis | Enghouse Systems vs. Open Text Corp | Enghouse Systems vs. Descartes Systems Group | Enghouse Systems vs. Constellation Software |
| HOME DEPOT vs. HPQ Silicon Resources | HOME DEPOT vs. Quorum Information Technologies | HOME DEPOT vs. CVW CleanTech | 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 Stocks Directory module to find actively traded stocks across global markets.
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