Correlation Between HOME DEPOT and ATCO
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and ATCO 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 ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME DEPOT CDR and ATCO, you can compare the effects of market volatilities on HOME DEPOT and ATCO 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 ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and ATCO.
Diversification Opportunities for HOME DEPOT and ATCO
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HOME and ATCO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO 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 HOME DEPOT CDR are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and ATCO go up and down completely randomly.
Pair Corralation between HOME DEPOT and ATCO
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 1.28 times more return on investment than ATCO. However, HOME DEPOT is 1.28 times more volatile than ATCO. It trades about 0.08 of its potential returns per unit of risk. ATCO is currently generating about 0.07 per unit of risk. If you would invest 1,918 in HOME DEPOT CDR on August 31, 2024 and sell it today you would earn a total of 837.00 from holding HOME DEPOT CDR or generate 43.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
HOME DEPOT CDR vs. ATCO
Performance |
| Timeline |
| HOME DEPOT CDR |
| ATCO |
HOME DEPOT and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and ATCO
The main advantage of trading using opposite HOME DEPOT and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| HOME DEPOT vs. Berkshire Hathaway CDR | HOME DEPOT vs. JPMorgan Chase Co | HOME DEPOT vs. Bank of America | HOME DEPOT vs. Alphabet Inc CDR |
| ATCO vs. Caldwell Partners International | ATCO vs. Chesswood Group Limited | ATCO vs. Forstrong Global Income | ATCO vs. BMO Aggregate Bond |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |