Correlation Between FibraHotel and Home Depot
Can any of the company-specific risk be diversified away by investing in both FibraHotel 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 FibraHotel and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FibraHotel and The Home Depot, you can compare the effects of market volatilities on FibraHotel 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 FibraHotel with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of FibraHotel and Home Depot.
Diversification Opportunities for FibraHotel and Home Depot
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FibraHotel and Home is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and FibraHotel 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 FibraHotel 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 FibraHotel i.e., FibraHotel and Home Depot go up and down completely randomly.
Pair Corralation between FibraHotel and Home Depot
Assuming the 90 days trading horizon FibraHotel is expected to under-perform the Home Depot. In addition to that, FibraHotel is 1.25 times more volatile than The Home Depot. It trades about -0.04 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.19 per unit of volatility. If you would invest 796,659 in The Home Depot on November 8, 2024 and sell it today you would earn a total of 54,541 from holding The Home Depot or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FibraHotel vs. The Home Depot
Performance |
| Timeline |
| FibraHotel |
| Home Depot |
FibraHotel and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FibraHotel and Home Depot
The main advantage of trading using opposite FibraHotel and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FibraHotel 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.| FibraHotel vs. Applied Materials | FibraHotel vs. Cognizant Technology Solutions | FibraHotel vs. KB Home | FibraHotel vs. Grupo Industrial Saltillo |
| Home Depot vs. Micron Technology | Home Depot vs. Monster Beverage Corp | Home Depot vs. Lloyds Banking Group | Home Depot vs. Verizon Communications |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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