Correlation Between Home Depot and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Home Depot and OceanaGold 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 OceanaGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and OceanaGold, you can compare the effects of market volatilities on Home Depot and OceanaGold 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 OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and OceanaGold.
Diversification Opportunities for Home Depot and OceanaGold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and OceanaGold is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold 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 OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Home Depot i.e., Home Depot and OceanaGold go up and down completely randomly.
Pair Corralation between Home Depot and OceanaGold
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.76 times less return on investment than OceanaGold. But when comparing it to its historical volatility, Home Depot is 2.49 times less risky than OceanaGold. It trades about 0.07 of its potential returns per unit of risk. OceanaGold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 188.00 in OceanaGold on September 12, 2024 and sell it today you would earn a total of 126.00 from holding OceanaGold or generate 67.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Home Depot vs. OceanaGold
Performance |
| Timeline |
| Home Depot |
| OceanaGold |
Home Depot and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and OceanaGold
The main advantage of trading using opposite Home Depot and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
| OceanaGold vs. Cache Exploration | OceanaGold vs. Evolution Mining | OceanaGold vs. Northern Star Resources | OceanaGold vs. Wesdome Gold Mines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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