Correlation Between Home Depot and LIV Capital
Can any of the company-specific risk be diversified away by investing in both Home Depot and LIV Capital 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 LIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and LIV Capital Acquisition, you can compare the effects of market volatilities on Home Depot and LIV Capital 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 LIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and LIV Capital.
Diversification Opportunities for Home Depot and LIV Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and LIV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and LIV Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIV Capital Acquisition 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 LIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIV Capital Acquisition has no effect on the direction of Home Depot i.e., Home Depot and LIV Capital go up and down completely randomly.
Pair Corralation between Home Depot and LIV Capital
If you would invest 36,940 in Home Depot on September 1, 2024 and sell it today you would earn a total of 5,973 from holding Home Depot or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.53% |
| Values | Daily Returns |
Home Depot vs. LIV Capital Acquisition
Performance |
| Timeline |
| Home Depot |
| LIV Capital Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and LIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and LIV Capital
The main advantage of trading using opposite Home Depot and LIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, LIV Capital 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 LIV Capital will offset losses from the drop in LIV Capital's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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