Correlation Between Plastic Omnium and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and HOME DEPOT, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and HOME DEPOT.
Diversification Opportunities for Plastic Omnium and HOME DEPOT
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plastic and HOME is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and HOME DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and HOME DEPOT go up and down completely randomly.
Pair Corralation between Plastic Omnium and HOME DEPOT
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 2.1 times more return on investment than HOME DEPOT. However, Plastic Omnium is 2.1 times more volatile than HOME DEPOT. It trades about 0.15 of its potential returns per unit of risk. HOME DEPOT is currently generating about 0.16 per unit of risk. If you would invest 994.00 in Plastic Omnium on November 3, 2024 and sell it today you would earn a total of 88.00 from holding Plastic Omnium or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. HOME DEPOT
Performance |
| Timeline |
| Plastic Omnium |
| HOME DEPOT |
Plastic Omnium and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and HOME DEPOT
The main advantage of trading using opposite Plastic Omnium and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Tianjin Capital Environmental | Plastic Omnium vs. STEEL DYNAMICS | Plastic Omnium vs. Siemens Healthineers AG | Plastic Omnium vs. TOMBADOR IRON LTD |
| HOME DEPOT vs. DICKS Sporting Goods | HOME DEPOT vs. Hemisphere Energy Corp | HOME DEPOT vs. Zoom Video Communications | HOME DEPOT vs. USWE SPORTS AB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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