Correlation Between HOME DEPOT and Bce
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Bce 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 Bce 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 Bce Inc Pref, you can compare the effects of market volatilities on HOME DEPOT and Bce 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 Bce. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Bce.
Diversification Opportunities for HOME DEPOT and Bce
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HOME and Bce is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Bce Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bce Inc Pref 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 Bce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bce Inc Pref has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Bce go up and down completely randomly.
Pair Corralation between HOME DEPOT and Bce
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 2.24 times more return on investment than Bce. However, HOME DEPOT is 2.24 times more volatile than Bce Inc Pref. It trades about 0.05 of its potential returns per unit of risk. Bce Inc Pref is currently generating about 0.02 per unit of risk. If you would invest 1,997 in HOME DEPOT CDR on September 14, 2024 and sell it today you would earn a total of 677.00 from holding HOME DEPOT CDR or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Bce Inc Pref
Performance |
| Timeline |
| HOME DEPOT CDR |
| Bce Inc Pref |
HOME DEPOT and Bce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Bce
The main advantage of trading using opposite HOME DEPOT and Bce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Bce 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 Bce will offset losses from the drop in Bce's long position.| HOME DEPOT vs. iSign Media Solutions | HOME DEPOT vs. AGF Management Limited | HOME DEPOT vs. Canlan Ice Sports | HOME DEPOT vs. North American Construction |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |