Correlation Between HOME DEPOT and Plaza Retail
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Plaza Retail 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 Plaza Retail 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 Plaza Retail REIT, you can compare the effects of market volatilities on HOME DEPOT and Plaza Retail 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 Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Plaza Retail.
Diversification Opportunities for HOME DEPOT and Plaza Retail
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HOME and Plaza is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT 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 Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Plaza Retail go up and down completely randomly.
Pair Corralation between HOME DEPOT and Plaza Retail
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 1.63 times more return on investment than Plaza Retail. However, HOME DEPOT is 1.63 times more volatile than Plaza Retail REIT. It trades about 0.17 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.07 per unit of risk. If you would invest 2,109 in HOME DEPOT CDR on September 1, 2024 and sell it today you would earn a total of 646.00 from holding HOME DEPOT CDR or generate 30.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Plaza Retail REIT
Performance |
| Timeline |
| HOME DEPOT CDR |
| Plaza Retail REIT |
HOME DEPOT and Plaza Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Plaza Retail
The main advantage of trading using opposite HOME DEPOT and Plaza Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Plaza Retail 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 Plaza Retail will offset losses from the drop in Plaza Retail's long position.| HOME DEPOT vs. Rocky Mountain Liquor | HOME DEPOT vs. Orbit Garant Drilling | HOME DEPOT vs. Element Fleet Management | HOME DEPOT vs. AKITA Drilling |
| Plaza Retail vs. Slate Office REIT | Plaza Retail vs. Automotive Properties Real | Plaza Retail vs. BTB Real Estate | Plaza Retail vs. CT Real Estate |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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