Correlation Between HORNBACH Baumarkt and Home Depot
Can any of the company-specific risk be diversified away by investing in both HORNBACH Baumarkt 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 HORNBACH Baumarkt and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HORNBACH Baumarkt AG and The Home Depot, you can compare the effects of market volatilities on HORNBACH Baumarkt 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 HORNBACH Baumarkt with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of HORNBACH Baumarkt and Home Depot.
Diversification Opportunities for HORNBACH Baumarkt and Home Depot
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between HORNBACH and Home is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding HORNBACH Baumarkt AG and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and HORNBACH Baumarkt 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 HORNBACH Baumarkt AG 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 HORNBACH Baumarkt i.e., HORNBACH Baumarkt and Home Depot go up and down completely randomly.
Pair Corralation between HORNBACH Baumarkt and Home Depot
Assuming the 90 days trading horizon HORNBACH Baumarkt AG is expected to generate 1.12 times more return on investment than Home Depot. However, HORNBACH Baumarkt is 1.12 times more volatile than The Home Depot. It trades about 0.13 of its potential returns per unit of risk. The Home Depot is currently generating about 0.05 per unit of risk. If you would invest 5,850 in HORNBACH Baumarkt AG on October 19, 2024 and sell it today you would earn a total of 450.00 from holding HORNBACH Baumarkt AG or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HORNBACH Baumarkt AG vs. The Home Depot
Performance |
| Timeline |
| HORNBACH Baumarkt |
| Home Depot |
HORNBACH Baumarkt and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HORNBACH Baumarkt and Home Depot
The main advantage of trading using opposite HORNBACH Baumarkt and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HORNBACH Baumarkt 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.| HORNBACH Baumarkt vs. The Home Depot | HORNBACH Baumarkt vs. The Home Depot | HORNBACH Baumarkt vs. Floor Decor Holdings | HORNBACH Baumarkt vs. LESLIES INC DL |
| Home Depot vs. The Home Depot | Home Depot vs. Floor Decor Holdings | Home Depot vs. LESLIES INC DL | Home Depot vs. HORNBACH Baumarkt AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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