Correlation Between Home Depot and Amex Exploration
Can any of the company-specific risk be diversified away by investing in both Home Depot and Amex Exploration 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 Amex Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Amex Exploration, you can compare the effects of market volatilities on Home Depot and Amex Exploration 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 Amex Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Amex Exploration.
Diversification Opportunities for Home Depot and Amex Exploration
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Amex is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Amex Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amex Exploration 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 Amex Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amex Exploration has no effect on the direction of Home Depot i.e., Home Depot and Amex Exploration go up and down completely randomly.
Pair Corralation between Home Depot and Amex Exploration
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.38 times more return on investment than Amex Exploration. However, Home Depot is 2.63 times less risky than Amex Exploration. It trades about 0.18 of its potential returns per unit of risk. Amex Exploration is currently generating about -0.05 per unit of risk. If you would invest 37,247 in Home Depot on September 12, 2024 and sell it today you would earn a total of 5,012 from holding Home Depot or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Amex Exploration
Performance |
| Timeline |
| Home Depot |
| Amex Exploration |
Home Depot and Amex Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Amex Exploration
The main advantage of trading using opposite Home Depot and Amex Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Amex Exploration 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 Amex Exploration will offset losses from the drop in Amex Exploration's long position.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
| Amex Exploration vs. Minnova Corp | Amex Exploration vs. Argo Gold | Amex Exploration vs. Advance Gold Corp | Amex Exploration vs. Blue Star Gold |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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