Correlation Between Home Depot and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Home Depot and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and AMCON Distributing, you can compare the effects of market volatilities on Home Depot and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and AMCON Distributing.
Diversification Opportunities for Home Depot and AMCON Distributing
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and AMCON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Home Depot i.e., Home Depot and AMCON Distributing go up and down completely randomly.
Pair Corralation between Home Depot and AMCON Distributing
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.29 times more return on investment than AMCON Distributing. However, Home Depot is 3.39 times less risky than AMCON Distributing. It trades about 0.15 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.05 per unit of risk. If you would invest 39,964 in Home Depot on August 24, 2024 and sell it today you would earn a total of 2,036 from holding Home Depot or generate 5.09% 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. AMCON Distributing
Performance |
| Timeline |
| Home Depot |
| AMCON Distributing |
Home Depot and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and AMCON Distributing
The main advantage of trading using opposite Home Depot and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Home Depot vs. Live Ventures | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies | Home Depot vs. Tile Shop Holdings |
| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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