Correlation Between Home Depot and Rokmaster Resources
Can any of the company-specific risk be diversified away by investing in both Home Depot and Rokmaster Resources 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 Rokmaster Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Rokmaster Resources Corp, you can compare the effects of market volatilities on Home Depot and Rokmaster Resources 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 Rokmaster Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Rokmaster Resources.
Diversification Opportunities for Home Depot and Rokmaster Resources
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Rokmaster is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Rokmaster Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rokmaster Resources Corp 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 Rokmaster Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rokmaster Resources Corp has no effect on the direction of Home Depot i.e., Home Depot and Rokmaster Resources go up and down completely randomly.
Pair Corralation between Home Depot and Rokmaster Resources
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.01 times less return on investment than Rokmaster Resources. But when comparing it to its historical volatility, Home Depot is 10.48 times less risky than Rokmaster Resources. It trades about 0.16 of its potential returns per unit of risk. Rokmaster Resources Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Rokmaster Resources Corp on August 25, 2024 and sell it today you would lose (0.80) from holding Rokmaster Resources Corp or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Home Depot vs. Rokmaster Resources Corp
Performance |
| Timeline |
| Home Depot |
| Rokmaster Resources Corp |
Home Depot and Rokmaster Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Rokmaster Resources
The main advantage of trading using opposite Home Depot and Rokmaster Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Rokmaster Resources 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 Rokmaster Resources will offset losses from the drop in Rokmaster Resources' long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| Rokmaster Resources vs. Macmahon Holdings Limited | Rokmaster Resources vs. Hudson Resources | Rokmaster Resources vs. Thunder Gold Corp | Rokmaster Resources vs. Prime Meridian Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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