Correlation Between Home Depot and PlayAGS
Can any of the company-specific risk be diversified away by investing in both Home Depot and PlayAGS 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 PlayAGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and PlayAGS, you can compare the effects of market volatilities on Home Depot and PlayAGS 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 PlayAGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and PlayAGS.
Diversification Opportunities for Home Depot and PlayAGS
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and PlayAGS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS 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 PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Home Depot i.e., Home Depot and PlayAGS go up and down completely randomly.
Pair Corralation between Home Depot and PlayAGS
Allowing for the 90-day total investment horizon Home Depot is expected to generate 5.23 times more return on investment than PlayAGS. However, Home Depot is 5.23 times more volatile than PlayAGS. It trades about 0.23 of its potential returns per unit of risk. PlayAGS is currently generating about 0.19 per unit of risk. If you would invest 36,283 in Home Depot on August 31, 2024 and sell it today you would earn a total of 6,436 from holding Home Depot or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. PlayAGS
Performance |
| Timeline |
| Home Depot |
| PlayAGS |
Home Depot and PlayAGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and PlayAGS
The main advantage of trading using opposite Home Depot and PlayAGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, PlayAGS 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 PlayAGS will offset losses from the drop in PlayAGS's long position.| Home Depot vs. RLJ Lodging Trust | Home Depot vs. Aquagold International | Home Depot vs. Stepstone Group | Home Depot vs. Morningstar Unconstrained Allocation |
| PlayAGS vs. Light Wonder | PlayAGS vs. Everi Holdings | PlayAGS vs. Inspired Entertainment | PlayAGS vs. International Game Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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