Correlation Between Home Depot and Aim Investment
Can any of the company-specific risk be diversified away by investing in both Home Depot and Aim Investment 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 Aim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Aim Investment Secs, you can compare the effects of market volatilities on Home Depot and Aim Investment 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 Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Aim Investment.
Diversification Opportunities for Home Depot and Aim Investment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Aim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of Home Depot i.e., Home Depot and Aim Investment go up and down completely randomly.
Pair Corralation between Home Depot and Aim Investment
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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Aim Investment Secs
Performance |
| Timeline |
| Home Depot |
| Aim Investment Secs |
Home Depot and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Aim Investment
The main advantage of trading using opposite Home Depot and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Aim Investment 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 Aim Investment will offset losses from the drop in Aim Investment'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 |
| Aim Investment vs. Janus Global Technology | Aim Investment vs. Towpath Technology | Aim Investment vs. Global Technology Portfolio | Aim Investment vs. Allianzgi Technology Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |