Correlation Between Home Depot and Powell Max
Can any of the company-specific risk be diversified away by investing in both Home Depot and Powell Max 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 Powell Max into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Powell Max Limited, you can compare the effects of market volatilities on Home Depot and Powell Max 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 Powell Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Powell Max.
Diversification Opportunities for Home Depot and Powell Max
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Powell is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Powell Max Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Max Limited 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 Powell Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Max Limited has no effect on the direction of Home Depot i.e., Home Depot and Powell Max go up and down completely randomly.
Pair Corralation between Home Depot and Powell Max
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.22 times more return on investment than Powell Max. However, Home Depot is 4.5 times less risky than Powell Max. It trades about 0.09 of its potential returns per unit of risk. Powell Max Limited is currently generating about -0.04 per unit of risk. If you would invest 33,961 in Home Depot on September 3, 2024 and sell it today you would earn a total of 8,952 from holding Home Depot or generate 26.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 27.19% |
| Values | Daily Returns |
Home Depot vs. Powell Max Limited
Performance |
| Timeline |
| Home Depot |
| Powell Max Limited |
Home Depot and Powell Max Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Powell Max
The main advantage of trading using opposite Home Depot and Powell Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Powell Max 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 Powell Max will offset losses from the drop in Powell Max's long position.| Home Depot vs. Partner Communications | Home Depot vs. Merck Company | Home Depot vs. Western Midstream Partners | Home Depot vs. Edgewise Therapeutics |
| Powell Max vs. Afya | Powell Max vs. Hafnia Limited | Powell Max vs. Skillful Craftsman Education | Powell Max vs. Smith Douglas Homes |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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