Correlation Between Home Depot and Altitude Acquisition
Can any of the company-specific risk be diversified away by investing in both Home Depot and Altitude Acquisition 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 Altitude Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Altitude Acquisition Corp, you can compare the effects of market volatilities on Home Depot and Altitude Acquisition 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 Altitude Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Altitude Acquisition.
Diversification Opportunities for Home Depot and Altitude Acquisition
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Altitude is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Altitude Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altitude Acquisition Corp 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 Altitude Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altitude Acquisition Corp has no effect on the direction of Home Depot i.e., Home Depot and Altitude Acquisition go up and down completely randomly.
Pair Corralation between Home Depot and Altitude Acquisition
Allowing for the 90-day total investment horizon Home Depot is expected to generate 5.73 times more return on investment than Altitude Acquisition. However, Home Depot is 5.73 times more volatile than Altitude Acquisition Corp. It trades about 0.09 of its potential returns per unit of risk. Altitude Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest 29,008 in Home Depot on August 31, 2024 and sell it today you would earn a total of 13,905 from holding Home Depot or generate 47.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
Home Depot vs. Altitude Acquisition Corp
Performance |
| Timeline |
| Home Depot |
| Altitude Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Altitude Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Altitude Acquisition
The main advantage of trading using opposite Home Depot and Altitude Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Altitude Acquisition 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 Altitude Acquisition will offset losses from the drop in Altitude Acquisition'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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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