Correlation Between Home Depot and Global Blockchain
Can any of the company-specific risk be diversified away by investing in both Home Depot and Global Blockchain 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 Global Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Global Blockchain Acquisition, you can compare the effects of market volatilities on Home Depot and Global Blockchain 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 Global Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Global Blockchain.
Diversification Opportunities for Home Depot and Global Blockchain
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and Global is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Global Blockchain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Blockchain 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 Global Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Blockchain has no effect on the direction of Home Depot i.e., Home Depot and Global Blockchain go up and down completely randomly.
Pair Corralation between Home Depot and Global Blockchain
Allowing for the 90-day total investment horizon Home Depot is expected to generate 192.58 times less return on investment than Global Blockchain. But when comparing it to its historical volatility, Home Depot is 158.38 times less risky than Global Blockchain. It trades about 0.16 of its potential returns per unit of risk. Global Blockchain Acquisition is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9.87 in Global Blockchain Acquisition on August 26, 2024 and sell it today you would earn a total of 1.13 from holding Global Blockchain Acquisition or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.65% |
| Values | Daily Returns |
Home Depot vs. Global Blockchain Acquisition
Performance |
| Timeline |
| Home Depot |
| Global Blockchain |
Home Depot and Global Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Global Blockchain
The main advantage of trading using opposite Home Depot and Global Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Global Blockchain 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 Global Blockchain will offset losses from the drop in Global Blockchain's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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