Correlation Between Home Depot and AdTheorent Holding
Can any of the company-specific risk be diversified away by investing in both Home Depot and AdTheorent Holding 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 AdTheorent Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and AdTheorent Holding, you can compare the effects of market volatilities on Home Depot and AdTheorent Holding 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 AdTheorent Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and AdTheorent Holding.
Diversification Opportunities for Home Depot and AdTheorent Holding
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and AdTheorent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and AdTheorent Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdTheorent Holding 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 are associated (or correlated) with AdTheorent Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdTheorent Holding has no effect on the direction of Home Depot i.e., Home Depot and AdTheorent Holding go up and down completely randomly.
Pair Corralation between Home Depot and AdTheorent Holding
If you would invest 40,289 in Home Depot on August 28, 2024 and sell it today you would earn a total of 2,663 from holding Home Depot or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Home Depot vs. AdTheorent Holding
Performance |
| Timeline |
| Home Depot |
| AdTheorent Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and AdTheorent Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and AdTheorent Holding
The main advantage of trading using opposite Home Depot and AdTheorent Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, AdTheorent Holding 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 AdTheorent Holding will offset losses from the drop in AdTheorent Holding's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| AdTheorent Holding vs. ADS TEC ENERGY PLC | AdTheorent Holding vs. CompoSecure | AdTheorent Holding vs. Dave Warrants | AdTheorent Holding vs. Aurora Innovation |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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