Correlation Between Home Depot and Gamco Global
Can any of the company-specific risk be diversified away by investing in both Home Depot and Gamco Global 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 Gamco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Gamco Global, you can compare the effects of market volatilities on Home Depot and Gamco Global 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 Gamco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Gamco Global.
Diversification Opportunities for Home Depot and Gamco Global
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Gamco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Gamco Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco 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 Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global has no effect on the direction of Home Depot i.e., Home Depot and Gamco Global go up and down completely randomly.
Pair Corralation between Home Depot and Gamco Global
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.43 times more return on investment than Gamco Global. However, Home Depot is 1.43 times more volatile than Gamco Global. It trades about 0.18 of its potential returns per unit of risk. Gamco Global is currently generating about 0.05 per unit of risk. If you would invest 32,432 in Home Depot on August 31, 2024 and sell it today you would earn a total of 10,481 from holding Home Depot or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Gamco Global
Performance |
| Timeline |
| Home Depot |
| Gamco Global |
Home Depot and Gamco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Gamco Global
The main advantage of trading using opposite Home Depot and Gamco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Gamco Global 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 Gamco Global will offset losses from the drop in Gamco Global's long position.| Home Depot vs. RLJ Lodging Trust | Home Depot vs. Aquagold International | Home Depot vs. Stepstone Group | Home Depot vs. Morningstar Unconstrained Allocation |
| Gamco Global vs. Gabelli Global Small | Gamco Global vs. Gabelli Convertible And | Gamco Global vs. MFS Investment Grade | Gamco Global vs. Eaton Vance National |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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