Correlation Between Home Depot and Rockdale Resources
Can any of the company-specific risk be diversified away by investing in both Home Depot and Rockdale Resources 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 Rockdale Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Rockdale Resources Corp, you can compare the effects of market volatilities on Home Depot and Rockdale Resources 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 Rockdale Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Rockdale Resources.
Diversification Opportunities for Home Depot and Rockdale Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Rockdale is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Rockdale Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockdale Resources 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 Rockdale Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockdale Resources Corp has no effect on the direction of Home Depot i.e., Home Depot and Rockdale Resources go up and down completely randomly.
Pair Corralation between Home Depot and Rockdale Resources
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.13 times more return on investment than Rockdale Resources. However, Home Depot is 7.54 times less risky than Rockdale Resources. It trades about 0.18 of its potential returns per unit of risk. Rockdale Resources Corp is currently generating about -0.1 per unit of risk. If you would invest 32,432 in Home Depot on September 1, 2024 and sell it today you would earn a total of 10,481 from holding Home Depot or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.57% |
| Values | Daily Returns |
Home Depot vs. Rockdale Resources Corp
Performance |
| Timeline |
| Home Depot |
| Rockdale Resources Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Rockdale Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Rockdale Resources
The main advantage of trading using opposite Home Depot and Rockdale Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Rockdale Resources 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 Rockdale Resources will offset losses from the drop in Rockdale Resources' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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