Correlation Between Home Depot and Promotora
Can any of the company-specific risk be diversified away by investing in both Home Depot and Promotora 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 Home Depot and Promotora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Promotora y Operadora, you can compare the effects of market volatilities on Home Depot and Promotora 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 Home Depot with a short position of Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Promotora.
Diversification Opportunities for Home Depot and Promotora
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Promotora is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora and Home Depot 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 The Home Depot are associated (or correlated) with Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of Home Depot i.e., Home Depot and Promotora go up and down completely randomly.
Pair Corralation between Home Depot and Promotora
Assuming the 90 days horizon The Home Depot is expected to generate 0.78 times more return on investment than Promotora. However, The Home Depot is 1.29 times less risky than Promotora. It trades about 0.2 of its potential returns per unit of risk. Promotora y Operadora is currently generating about 0.05 per unit of risk. If you would invest 786,785 in The Home Depot on August 30, 2024 and sell it today you would earn a total of 92,415 from holding The Home Depot or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Promotora y Operadora
Performance |
| Timeline |
| Home Depot |
| Promotora y Operadora |
Home Depot and Promotora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Promotora
The main advantage of trading using opposite Home Depot and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Promotora 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 Promotora will offset losses from the drop in Promotora's long position.| Home Depot vs. Cognizant Technology Solutions | Home Depot vs. McEwen Mining | Home Depot vs. Samsung Electronics Co | Home Depot vs. DXC Technology |
| Promotora vs. Grupo Profuturo SAB | Promotora vs. Corporacin Inmobiliaria Vesta | Promotora vs. Financiera Independencia SAB | Promotora vs. The Select Sector |
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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