Correlation Between Home Depot and SAI Old
Can any of the company-specific risk be diversified away by investing in both Home Depot and SAI Old 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 SAI Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and SAI Old, you can compare the effects of market volatilities on Home Depot and SAI Old 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 SAI Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SAI Old.
Diversification Opportunities for Home Depot and SAI Old
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and SAI is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SAI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAI Old 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 SAI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAI Old has no effect on the direction of Home Depot i.e., Home Depot and SAI Old go up and down completely randomly.
Pair Corralation between Home Depot and SAI Old
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.0 times less return on investment than SAI Old. But when comparing it to its historical volatility, Home Depot is 6.65 times less risky than SAI Old. It trades about 0.1 of its potential returns per unit of risk. SAI Old is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 101.00 in SAI Old on October 27, 2024 and sell it today you would earn a total of 16.00 from holding SAI Old or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.02% |
| Values | Daily Returns |
Home Depot vs. SAI Old
Performance |
| Timeline |
| Home Depot |
| SAI Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Home Depot and SAI Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SAI Old
The main advantage of trading using opposite Home Depot and SAI Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SAI Old 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 SAI Old will offset losses from the drop in SAI Old'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 |
| SAI Old vs. Zhong Yang Financial | SAI Old vs. Netcapital | SAI Old vs. Magic Empire Global | SAI Old vs. Applied Digital |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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