Correlation Between HOME DEPOT and Sun Lif
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Sun Lif 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 Sun Lif 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 Sun Lif Non, you can compare the effects of market volatilities on HOME DEPOT and Sun Lif 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 Sun Lif. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Sun Lif.
Diversification Opportunities for HOME DEPOT and Sun Lif
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HOME and Sun is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Sun Lif Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Lif Non 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 Sun Lif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Lif Non has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Sun Lif go up and down completely randomly.
Pair Corralation between HOME DEPOT and Sun Lif
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 1.96 times more return on investment than Sun Lif. However, HOME DEPOT is 1.96 times more volatile than Sun Lif Non. It trades about 0.26 of its potential returns per unit of risk. Sun Lif Non is currently generating about 0.04 per unit of risk. If you would invest 2,534 in HOME DEPOT CDR on September 1, 2024 and sell it today you would earn a total of 221.00 from holding HOME DEPOT CDR or generate 8.72% 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. Sun Lif Non
Performance |
| Timeline |
| HOME DEPOT CDR |
| Sun Lif Non |
HOME DEPOT and Sun Lif Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Sun Lif
The main advantage of trading using opposite HOME DEPOT and Sun Lif positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Sun Lif 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 Sun Lif will offset losses from the drop in Sun Lif'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 |
| Sun Lif vs. A W FOOD | Sun Lif vs. Canlan Ice Sports | Sun Lif vs. HOME DEPOT CDR | Sun Lif vs. Dream Office Real |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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