Correlation Between HOME DEPOT and Exxon
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Exxon 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 Exxon 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 EXXON MOBIL CDR, you can compare the effects of market volatilities on HOME DEPOT and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Exxon.
Diversification Opportunities for HOME DEPOT and Exxon
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between HOME and Exxon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Exxon go up and down completely randomly.
Pair Corralation between HOME DEPOT and Exxon
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 1.03 times more return on investment than Exxon. However, HOME DEPOT is 1.03 times more volatile than EXXON MOBIL CDR. It trades about 0.07 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about -0.03 per unit of risk. If you would invest 2,258 in HOME DEPOT CDR on September 22, 2024 and sell it today you would earn a total of 269.00 from holding HOME DEPOT CDR or generate 11.91% 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. EXXON MOBIL CDR
Performance |
| Timeline |
| HOME DEPOT CDR |
| EXXON MOBIL CDR |
HOME DEPOT and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Exxon
The main advantage of trading using opposite HOME DEPOT and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| HOME DEPOT vs. Orbit Garant Drilling | HOME DEPOT vs. Quisitive Technology Solutions | HOME DEPOT vs. CHAR Technologies | HOME DEPOT vs. Calian Technologies |
| Exxon vs. Data Communications Management | Exxon vs. Nova Leap Health | Exxon vs. Arbor Metals Corp | Exxon vs. TGS Esports |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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