Correlation Between Home Depot and Enanta Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Home Depot and Enanta Pharmaceuticals 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 Enanta Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Enanta Pharmaceuticals, you can compare the effects of market volatilities on Home Depot and Enanta Pharmaceuticals 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 Enanta Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Enanta Pharmaceuticals.
Diversification Opportunities for Home Depot and Enanta Pharmaceuticals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Enanta is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Enanta Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enanta Pharmaceuticals 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 Enanta Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enanta Pharmaceuticals has no effect on the direction of Home Depot i.e., Home Depot and Enanta Pharmaceuticals go up and down completely randomly.
Pair Corralation between Home Depot and Enanta Pharmaceuticals
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.36 times more return on investment than Enanta Pharmaceuticals. However, Home Depot is 2.77 times less risky than Enanta Pharmaceuticals. It trades about 0.06 of its potential returns per unit of risk. Enanta Pharmaceuticals is currently generating about -0.07 per unit of risk. If you would invest 30,435 in Home Depot on August 30, 2024 and sell it today you would earn a total of 12,284 from holding Home Depot or generate 40.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Enanta Pharmaceuticals
Performance |
| Timeline |
| Home Depot |
| Enanta Pharmaceuticals |
Home Depot and Enanta Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Enanta Pharmaceuticals
The main advantage of trading using opposite Home Depot and Enanta Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Enanta Pharmaceuticals 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 Enanta Pharmaceuticals will offset losses from the drop in Enanta Pharmaceuticals' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Enanta Pharmaceuticals vs. Monte Rosa Therapeutics | Enanta Pharmaceuticals vs. Design Therapeutics | Enanta Pharmaceuticals vs. Werewolf Therapeutics | Enanta Pharmaceuticals vs. Ikena Oncology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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