Correlation Between Home Depot and Aimia
Can any of the company-specific risk be diversified away by investing in both Home Depot and Aimia 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 Aimia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Aimia Inc, you can compare the effects of market volatilities on Home Depot and Aimia 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 Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Aimia.
Diversification Opportunities for Home Depot and Aimia
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Aimia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc 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 Aimia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Inc has no effect on the direction of Home Depot i.e., Home Depot and Aimia go up and down completely randomly.
Pair Corralation between Home Depot and Aimia
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.06 times more return on investment than Aimia. However, Home Depot is 1.06 times more volatile than Aimia Inc. It trades about 0.2 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.12 per unit of risk. If you would invest 40,289 in Home Depot on August 29, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Aimia Inc
Performance |
| Timeline |
| Home Depot |
| Aimia Inc |
Home Depot and Aimia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Aimia
The main advantage of trading using opposite Home Depot and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Aimia 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 Aimia will offset losses from the drop in Aimia's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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