Correlation Between HOME DEPOT and Economic Investment
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Economic Investment 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 Economic Investment 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 Economic Investment Trust, you can compare the effects of market volatilities on HOME DEPOT and Economic Investment 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 Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Economic Investment.
Diversification Opportunities for HOME DEPOT and Economic Investment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between HOME and Economic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust 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 Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Economic Investment go up and down completely randomly.
Pair Corralation between HOME DEPOT and Economic Investment
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to under-perform the Economic Investment. In addition to that, HOME DEPOT is 1.08 times more volatile than Economic Investment Trust. It trades about -0.24 of its total potential returns per unit of risk. Economic Investment Trust is currently generating about 0.17 per unit of volatility. If you would invest 18,160 in Economic Investment Trust on November 29, 2024 and sell it today you would earn a total of 840.00 from holding Economic Investment Trust or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Economic Investment Trust
Performance |
| Timeline |
| HOME DEPOT CDR |
| Economic Investment Trust |
HOME DEPOT and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Economic Investment
The main advantage of trading using opposite HOME DEPOT and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.| HOME DEPOT vs. NorthWest Healthcare Properties | HOME DEPOT vs. Jamieson Wellness | HOME DEPOT vs. CVS HEALTH CDR | HOME DEPOT vs. Data Communications Management |
| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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