Correlation Between Home Depot and New Hampshire
Can any of the company-specific risk be diversified away by investing in both Home Depot and New Hampshire 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 New Hampshire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and New Hampshire Higher, you can compare the effects of market volatilities on Home Depot and New Hampshire 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 New Hampshire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and New Hampshire.
Diversification Opportunities for Home Depot and New Hampshire
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and New is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and New Hampshire Higher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hampshire Higher 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 New Hampshire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hampshire Higher has no effect on the direction of Home Depot i.e., Home Depot and New Hampshire go up and down completely randomly.
Pair Corralation between Home Depot and New Hampshire
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.51 times more return on investment than New Hampshire. However, Home Depot is 2.51 times more volatile than New Hampshire Higher. It trades about 0.06 of its potential returns per unit of risk. New Hampshire Higher is currently generating about 0.1 per unit of risk. If you would invest 30,021 in Home Depot on September 12, 2024 and sell it today you would earn a total of 12,238 from holding Home Depot or generate 40.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. New Hampshire Higher
Performance |
| Timeline |
| Home Depot |
| New Hampshire Higher |
Home Depot and New Hampshire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and New Hampshire
The main advantage of trading using opposite Home Depot and New Hampshire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, New Hampshire 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 New Hampshire will offset losses from the drop in New Hampshire's long position.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
| New Hampshire vs. Forum Real Estate | New Hampshire vs. Dunham Real Estate | New Hampshire vs. Pender Real Estate | New Hampshire vs. Sa Real Estate |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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