Correlation Between Home Depot and APT Satellite
Can any of the company-specific risk be diversified away by investing in both Home Depot and APT Satellite 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 APT Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and APT Satellite Holdings, you can compare the effects of market volatilities on Home Depot and APT Satellite 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 APT Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and APT Satellite.
Diversification Opportunities for Home Depot and APT Satellite
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and APT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and APT Satellite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Satellite Holdings 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 APT Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Satellite Holdings has no effect on the direction of Home Depot i.e., Home Depot and APT Satellite go up and down completely randomly.
Pair Corralation between Home Depot and APT Satellite
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.18 times less return on investment than APT Satellite. But when comparing it to its historical volatility, Home Depot is 1.84 times less risky than APT Satellite. It trades about 0.08 of its potential returns per unit of risk. APT Satellite Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 23.00 in APT Satellite Holdings on September 12, 2024 and sell it today you would earn a total of 5.00 from holding APT Satellite Holdings or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 20.24% |
| Values | Daily Returns |
Home Depot vs. APT Satellite Holdings
Performance |
| Timeline |
| Home Depot |
| APT Satellite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and APT Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and APT Satellite
The main advantage of trading using opposite Home Depot and APT Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, APT Satellite 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 APT Satellite will offset losses from the drop in APT Satellite'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 |
| APT Satellite vs. Verizon Communications | APT Satellite vs. T Mobile | APT Satellite vs. Lumen Technologies | APT Satellite vs. Comcast Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |