Correlation Between Home Depot and Bionomics
Can any of the company-specific risk be diversified away by investing in both Home Depot and Bionomics 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 Bionomics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Bionomics Ltd ADR, you can compare the effects of market volatilities on Home Depot and Bionomics 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 Bionomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Bionomics.
Diversification Opportunities for Home Depot and Bionomics
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Bionomics is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Bionomics Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionomics ADR 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 Bionomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionomics ADR has no effect on the direction of Home Depot i.e., Home Depot and Bionomics go up and down completely randomly.
Pair Corralation between Home Depot and Bionomics
Allowing for the 90-day total investment horizon Home Depot is expected to generate 32.37 times less return on investment than Bionomics. But when comparing it to its historical volatility, Home Depot is 26.04 times less risky than Bionomics. It trades about 0.09 of its potential returns per unit of risk. Bionomics Ltd ADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Bionomics Ltd ADR on August 24, 2024 and sell it today you would lose (1.00) from holding Bionomics Ltd ADR or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Bionomics Ltd ADR
Performance |
| Timeline |
| Home Depot |
| Bionomics ADR |
Home Depot and Bionomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Bionomics
The main advantage of trading using opposite Home Depot and Bionomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Bionomics 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 Bionomics will offset losses from the drop in Bionomics' long position.| Home Depot vs. Small Cap Core | Home Depot vs. Freedom Holding Corp | Home Depot vs. Gfl Environmental Holdings | Home Depot vs. Growth Fund Of |
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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 Stocks Directory module to find actively traded stocks across global markets.
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