Correlation Between Home Depot and Ebix
Can any of the company-specific risk be diversified away by investing in both Home Depot and Ebix 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 Ebix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Ebix Inc, you can compare the effects of market volatilities on Home Depot and Ebix 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 Ebix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Ebix.
Diversification Opportunities for Home Depot and Ebix
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Ebix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Ebix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebix Inc 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 Ebix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebix Inc has no effect on the direction of Home Depot i.e., Home Depot and Ebix go up and down completely randomly.
Pair Corralation between Home Depot and Ebix
Allowing for the 90-day total investment horizon Home Depot is expected to generate 5.79 times less return on investment than Ebix. But when comparing it to its historical volatility, Home Depot is 3.68 times less risky than Ebix. It trades about 0.06 of its potential returns per unit of risk. Ebix Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,822 in Ebix Inc on September 4, 2024 and sell it today you would earn a total of 898.00 from holding Ebix Inc or generate 49.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 24.62% |
| Values | Daily Returns |
Home Depot vs. Ebix Inc
Performance |
| Timeline |
| Home Depot |
| Ebix Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Ebix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Ebix
The main advantage of trading using opposite Home Depot and Ebix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Ebix 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 Ebix will offset losses from the drop in Ebix's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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