Correlation Between HOME DEPOT and Income Financial
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Income Financial 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 Income Financial 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 Income Financial Trust, you can compare the effects of market volatilities on HOME DEPOT and Income Financial 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 Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Income Financial.
Diversification Opportunities for HOME DEPOT and Income Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HOME and Income is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial 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 Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Income Financial go up and down completely randomly.
Pair Corralation between HOME DEPOT and Income Financial
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 1.33 times less return on investment than Income Financial. In addition to that, HOME DEPOT is 1.59 times more volatile than Income Financial Trust. It trades about 0.18 of its total potential returns per unit of risk. Income Financial Trust is currently generating about 0.39 per unit of volatility. If you would invest 828.00 in Income Financial Trust on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Income Financial Trust or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Income Financial Trust
Performance |
| Timeline |
| HOME DEPOT CDR |
| Income Financial Trust |
HOME DEPOT and Income Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Income Financial
The main advantage of trading using opposite HOME DEPOT and Income Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Income Financial 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 Income Financial will offset losses from the drop in Income Financial's long position.| HOME DEPOT vs. HPQ Silicon Resources | HOME DEPOT vs. Quorum Information Technologies | HOME DEPOT vs. CVW CleanTech | HOME DEPOT vs. Data Communications Management |
| Income Financial vs. Dividend Select 15 | Income Financial vs. Global Dividend Growth | Income Financial vs. Brompton Split Banc | Income Financial vs. Real Estate E Commerce |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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