Correlation Between Home Depot and Putnam Vertible
Can any of the company-specific risk be diversified away by investing in both Home Depot and Putnam Vertible 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 Putnam Vertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Putnam Vertible Securities, you can compare the effects of market volatilities on Home Depot and Putnam Vertible 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 Putnam Vertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Putnam Vertible.
Diversification Opportunities for Home Depot and Putnam Vertible
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Putnam is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Putnam Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Vertible Secu 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 Putnam Vertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Vertible Secu has no effect on the direction of Home Depot i.e., Home Depot and Putnam Vertible go up and down completely randomly.
Pair Corralation between Home Depot and Putnam Vertible
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.15 times more return on investment than Putnam Vertible. However, Home Depot is 2.15 times more volatile than Putnam Vertible Securities. It trades about 0.22 of its potential returns per unit of risk. Putnam Vertible Securities is currently generating about 0.14 per unit of risk. If you would invest 38,918 in Home Depot on November 4, 2024 and sell it today you would earn a total of 2,280 from holding Home Depot or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Putnam Vertible Securities
Performance |
| Timeline |
| Home Depot |
| Putnam Vertible Secu |
Home Depot and Putnam Vertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Putnam Vertible
The main advantage of trading using opposite Home Depot and Putnam Vertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Putnam Vertible 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 Putnam Vertible will offset losses from the drop in Putnam Vertible'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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