Correlation Between Home Depot and Integrated Media
Can any of the company-specific risk be diversified away by investing in both Home Depot and Integrated Media 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 Integrated Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Integrated Media Technology, you can compare the effects of market volatilities on Home Depot and Integrated Media 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 Integrated Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Integrated Media.
Diversification Opportunities for Home Depot and Integrated Media
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Integrated is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Integrated Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Media Tec 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 Integrated Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Media Tec has no effect on the direction of Home Depot i.e., Home Depot and Integrated Media go up and down completely randomly.
Pair Corralation between Home Depot and Integrated Media
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.26 times more return on investment than Integrated Media. However, Home Depot is 3.91 times less risky than Integrated Media. It trades about 0.29 of its potential returns per unit of risk. Integrated Media Technology is currently generating about -0.36 per unit of risk. If you would invest 39,046 in Home Depot on August 31, 2024 and sell it today you would earn a total of 3,673 from holding Home Depot or generate 9.41% 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. Integrated Media Technology
Performance |
| Timeline |
| Home Depot |
| Integrated Media Tec |
Home Depot and Integrated Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Integrated Media
The main advantage of trading using opposite Home Depot and Integrated Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Integrated Media 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 Integrated Media will offset losses from the drop in Integrated Media'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 |
| Integrated Media vs. SigmaTron International | Integrated Media vs. Data IO | Integrated Media vs. Research Frontiers Incorporated | Integrated Media vs. Maris Tech |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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