Correlation Between European Residential and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both European Residential 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 European Residential and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and HOME DEPOT CDR, you can compare the effects of market volatilities on European Residential 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 European Residential with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and HOME DEPOT.
Diversification Opportunities for European Residential and HOME DEPOT
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between European and HOME is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real 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 European Residential 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 European Residential Real 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 European Residential i.e., European Residential and HOME DEPOT go up and down completely randomly.
Pair Corralation between European Residential and HOME DEPOT
Assuming the 90 days trading horizon European Residential Real is expected to generate 1.47 times more return on investment than HOME DEPOT. However, European Residential is 1.47 times more volatile than HOME DEPOT CDR. It trades about 0.09 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.07 per unit of risk. If you would invest 232.00 in European Residential Real on August 29, 2024 and sell it today you would earn a total of 135.00 from holding European Residential Real or generate 58.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. HOME DEPOT CDR
Performance |
| Timeline |
| European Residential Real |
| HOME DEPOT CDR |
European Residential and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and HOME DEPOT
The main advantage of trading using opposite European Residential and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential 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.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| HOME DEPOT vs. Eros Resources Corp | HOME DEPOT vs. Apple Inc CDR | HOME DEPOT vs. European Residential Real | HOME DEPOT vs. Canadian Utilities Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |