Correlation Between Home Depot and OPY Acquisition
Can any of the company-specific risk be diversified away by investing in both Home Depot and OPY Acquisition 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 OPY Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and OPY Acquisition I, you can compare the effects of market volatilities on Home Depot and OPY Acquisition 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 OPY Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and OPY Acquisition.
Diversification Opportunities for Home Depot and OPY Acquisition
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and OPY is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and OPY Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPY Acquisition I 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 OPY Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPY Acquisition I has no effect on the direction of Home Depot i.e., Home Depot and OPY Acquisition go up and down completely randomly.
Pair Corralation between Home Depot and OPY Acquisition
Allowing for the 90-day total investment horizon Home Depot is expected to generate 7.72 times more return on investment than OPY Acquisition. However, Home Depot is 7.72 times more volatile than OPY Acquisition I. It trades about 0.09 of its potential returns per unit of risk. OPY Acquisition I is currently generating about 0.07 per unit of risk. If you would invest 27,477 in Home Depot on August 26, 2024 and sell it today you would earn a total of 14,523 from holding Home Depot or generate 52.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 13.96% |
| Values | Daily Returns |
Home Depot vs. OPY Acquisition I
Performance |
| Timeline |
| Home Depot |
| OPY Acquisition I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and OPY Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and OPY Acquisition
The main advantage of trading using opposite Home Depot and OPY Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, OPY Acquisition 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 OPY Acquisition will offset losses from the drop in OPY Acquisition's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| OPY Acquisition vs. Patria Latin American | OPY Acquisition vs. Healthcare AI Acquisition | OPY Acquisition vs. Metal Sky Star |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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