Correlation Between Home Depot and Real Brands
Can any of the company-specific risk be diversified away by investing in both Home Depot and Real Brands 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 Real Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Real Brands, you can compare the effects of market volatilities on Home Depot and Real Brands 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 Real Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Real Brands.
Diversification Opportunities for Home Depot and Real Brands
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Real is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands 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 Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Home Depot i.e., Home Depot and Real Brands go up and down completely randomly.
Pair Corralation between Home Depot and Real Brands
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.04 times more return on investment than Real Brands. However, Home Depot is 25.0 times less risky than Real Brands. It trades about 0.11 of its potential returns per unit of risk. Real Brands is currently generating about -0.03 per unit of risk. If you would invest 40,520 in Home Depot on August 29, 2024 and sell it today you would earn a total of 2,287 from holding Home Depot or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Home Depot vs. Real Brands
Performance |
| Timeline |
| Home Depot |
| Real Brands |
Home Depot and Real Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Real Brands
The main advantage of trading using opposite Home Depot and Real Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Real Brands 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 Real Brands will offset losses from the drop in Real Brands' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Real Brands vs. American Premium Water | Real Brands vs. Puration | Real Brands vs. Kona Gold Solutions | Real Brands vs. Leafbuyer Technologies |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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