Correlation Between Home Depot and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Home Depot and Orient Overseas 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 Orient Overseas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Orient Overseas Limited, you can compare the effects of market volatilities on Home Depot and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Orient Overseas.
Diversification Opportunities for Home Depot and Orient Overseas
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Orient is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of Home Depot i.e., Home Depot and Orient Overseas go up and down completely randomly.
Pair Corralation between Home Depot and Orient Overseas
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.64 times more return on investment than Orient Overseas. However, Home Depot is 3.64 times more volatile than Orient Overseas Limited. It trades about 0.26 of its potential returns per unit of risk. Orient Overseas Limited is currently generating about 0.21 per unit of risk. If you would invest 39,300 in Home Depot on August 30, 2024 and sell it today you would earn a total of 3,419 from holding Home Depot or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Orient Overseas Limited
Performance |
| Timeline |
| Home Depot |
| Orient Overseas |
Home Depot and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Orient Overseas
The main advantage of trading using opposite Home Depot and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Pacific Basin Shipping | Orient Overseas vs. Mitsui OSK Lines |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Correlations Find global opportunities by holding instruments from different markets |