Correlation Between HOME DEPOT and McChip Resources
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and McChip Resources 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 McChip Resources 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 McChip Resources, you can compare the effects of market volatilities on HOME DEPOT and McChip Resources 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 McChip Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and McChip Resources.
Diversification Opportunities for HOME DEPOT and McChip Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HOME and McChip is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and McChip Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McChip Resources 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 McChip Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McChip Resources has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and McChip Resources go up and down completely randomly.
Pair Corralation between HOME DEPOT and McChip Resources
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 1.08 times less return on investment than McChip Resources. But when comparing it to its historical volatility, HOME DEPOT CDR is 1.68 times less risky than McChip Resources. It trades about 0.16 of its potential returns per unit of risk. McChip Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 69.00 in McChip Resources on September 3, 2024 and sell it today you would earn a total of 21.00 from holding McChip Resources or generate 30.43% 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. McChip Resources
Performance |
| Timeline |
| HOME DEPOT CDR |
| McChip Resources |
HOME DEPOT and McChip Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and McChip Resources
The main advantage of trading using opposite HOME DEPOT and McChip Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, McChip Resources 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 McChip Resources will offset losses from the drop in McChip Resources' long position.| HOME DEPOT vs. Canlan Ice Sports | HOME DEPOT vs. Lion One Metals | HOME DEPOT vs. Algonquin Power Utilities | HOME DEPOT vs. Perseus Mining |
| McChip Resources vs. TGS Esports | McChip Resources vs. HOME DEPOT CDR | McChip Resources vs. Eddy Smart Home | McChip Resources vs. Datable Technology Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |