Correlation Between Home Depot and Minerva SA
Can any of the company-specific risk be diversified away by investing in both Home Depot and Minerva SA 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 Minerva SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Minerva SA, you can compare the effects of market volatilities on Home Depot and Minerva SA 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 Minerva SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Minerva SA.
Diversification Opportunities for Home Depot and Minerva SA
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Minerva is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva SA 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 Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of Home Depot i.e., Home Depot and Minerva SA go up and down completely randomly.
Pair Corralation between Home Depot and Minerva SA
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.36 times more return on investment than Minerva SA. However, Home Depot is 2.76 times less risky than Minerva SA. It trades about 0.18 of its potential returns per unit of risk. Minerva SA is currently generating about -0.04 per unit of risk. If you would invest 32,457 in Home Depot on September 2, 2024 and sell it today you would earn a total of 10,456 from holding Home Depot or generate 32.21% 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. Minerva SA
Performance |
| Timeline |
| Home Depot |
| Minerva SA |
Home Depot and Minerva SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Minerva SA
The main advantage of trading using opposite Home Depot and Minerva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Minerva SA 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 Minerva SA will offset losses from the drop in Minerva SA'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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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