Correlation Between Falcon Oil and Home Depot
Can any of the company-specific risk be diversified away by investing in both Falcon Oil 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 Falcon Oil and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and Home Depot, you can compare the effects of market volatilities on Falcon Oil 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 Falcon Oil with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Home Depot.
Diversification Opportunities for Falcon Oil and Home Depot
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Home is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Falcon Oil 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 Falcon Oil Gas 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 Falcon Oil i.e., Falcon Oil and Home Depot go up and down completely randomly.
Pair Corralation between Falcon Oil and Home Depot
Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the Home Depot. In addition to that, Falcon Oil is 13.79 times more volatile than Home Depot. It trades about -0.01 of its total potential returns per unit of risk. Home Depot is currently generating about 0.09 per unit of volatility. If you would invest 16,193 in Home Depot on September 3, 2024 and sell it today you would earn a total of 1,664 from holding Home Depot or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Falcon Oil Gas vs. Home Depot
Performance |
| Timeline |
| Falcon Oil Gas |
| Home Depot |
Falcon Oil and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and Home Depot
The main advantage of trading using opposite Falcon Oil and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil 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.| Falcon Oil vs. Sabien Technology Group | Falcon Oil vs. Flow Traders NV | Falcon Oil vs. Cognizant Technology Solutions | Falcon Oil vs. Auto Trader Group |
| Home Depot vs. Rockfire Resources plc | Home Depot vs. Tlou Energy | Home Depot vs. Falcon Oil Gas | Home Depot vs. Helium One Global |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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