Correlation Between Home Depot and Azure Holding
Can any of the company-specific risk be diversified away by investing in both Home Depot and Azure Holding 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 Azure Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Azure Holding Group, you can compare the effects of market volatilities on Home Depot and Azure Holding 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 Azure Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Azure Holding.
Diversification Opportunities for Home Depot and Azure Holding
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Azure is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Azure Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azure Holding Group 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 Azure Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azure Holding Group has no effect on the direction of Home Depot i.e., Home Depot and Azure Holding go up and down completely randomly.
Pair Corralation between Home Depot and Azure Holding
Allowing for the 90-day total investment horizon Home Depot is expected to generate 48.29 times less return on investment than Azure Holding. But when comparing it to its historical volatility, Home Depot is 70.47 times less risky than Azure Holding. It trades about 0.18 of its potential returns per unit of risk. Azure Holding Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.11 in Azure Holding Group on September 1, 2024 and sell it today you would earn a total of 18.89 from holding Azure Holding Group or generate 17172.73% 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. Azure Holding Group
Performance |
| Timeline |
| Home Depot |
| Azure Holding Group |
Home Depot and Azure Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Azure Holding
The main advantage of trading using opposite Home Depot and Azure Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Azure Holding 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 Azure Holding will offset losses from the drop in Azure Holding's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Azure Holding vs. Porsche Automobile Holding | Azure Holding vs. Ferrari NV | Azure Holding vs. Toyota Motor | Azure Holding vs. General Motors |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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