Correlation Between Home Depot and Mainstay Epoch
Can any of the company-specific risk be diversified away by investing in both Home Depot and Mainstay Epoch 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 Mainstay Epoch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Mainstay Epoch Global, you can compare the effects of market volatilities on Home Depot and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Mainstay Epoch.
Diversification Opportunities for Home Depot and Mainstay Epoch
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Mainstay is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Mainstay Epoch Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Global 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Global has no effect on the direction of Home Depot i.e., Home Depot and Mainstay Epoch go up and down completely randomly.
Pair Corralation between Home Depot and Mainstay Epoch
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.02 times more return on investment than Mainstay Epoch. However, Home Depot is 2.02 times more volatile than Mainstay Epoch Global. It trades about 0.06 of its potential returns per unit of risk. Mainstay Epoch Global is currently generating about 0.08 per unit of risk. If you would invest 30,557 in Home Depot on August 24, 2024 and sell it today you would earn a total of 11,443 from holding Home Depot or generate 37.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Home Depot vs. Mainstay Epoch Global
Performance |
| Timeline |
| Home Depot |
| Mainstay Epoch Global |
Home Depot and Mainstay Epoch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Mainstay Epoch
The main advantage of trading using opposite Home Depot and Mainstay Epoch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Mainstay Epoch 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 Mainstay Epoch will offset losses from the drop in Mainstay Epoch'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 |
| Mainstay Epoch vs. Praxis Growth Index | Mainstay Epoch vs. Artisan Small Cap | Mainstay Epoch vs. Qs Growth Fund | Mainstay Epoch vs. Champlain Mid Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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