Correlation Between Home Depot and Planet 13
Can any of the company-specific risk be diversified away by investing in both Home Depot and Planet 13 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 Planet 13 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Planet 13 Holdings, you can compare the effects of market volatilities on Home Depot and Planet 13 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 Planet 13. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Planet 13.
Diversification Opportunities for Home Depot and Planet 13
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Planet is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Planet 13 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet 13 Holdings 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 Planet 13. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet 13 Holdings has no effect on the direction of Home Depot i.e., Home Depot and Planet 13 go up and down completely randomly.
Pair Corralation between Home Depot and Planet 13
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.23 times more return on investment than Planet 13. However, Home Depot is 4.42 times less risky than Planet 13. It trades about 0.15 of its potential returns per unit of risk. Planet 13 Holdings is currently generating about -0.08 per unit of risk. If you would invest 40,615 in Home Depot on September 12, 2024 and sell it today you would earn a total of 1,644 from holding Home Depot or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Planet 13 Holdings
Performance |
| Timeline |
| Home Depot |
| Planet 13 Holdings |
Home Depot and Planet 13 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Planet 13
The main advantage of trading using opposite Home Depot and Planet 13 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Planet 13 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 Planet 13 will offset losses from the drop in Planet 13'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 |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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