Correlation Between Home Depot and SCCB
Can any of the company-specific risk be diversified away by investing in both Home Depot and SCCB 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 SCCB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and SCCB, you can compare the effects of market volatilities on Home Depot and SCCB 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 SCCB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SCCB.
Diversification Opportunities for Home Depot and SCCB
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and SCCB is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SCCB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCCB 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 SCCB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCCB has no effect on the direction of Home Depot i.e., Home Depot and SCCB go up and down completely randomly.
Pair Corralation between Home Depot and SCCB
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.8 times more return on investment than SCCB. However, Home Depot is 2.8 times more volatile than SCCB. It trades about 0.06 of its potential returns per unit of risk. SCCB is currently generating about 0.07 per unit of risk. If you would invest 30,181 in Home Depot on August 31, 2024 and sell it today you would earn a total of 12,732 from holding Home Depot or generate 42.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.62% |
| Values | Daily Returns |
Home Depot vs. SCCB
Performance |
| Timeline |
| Home Depot |
| SCCB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and SCCB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SCCB
The main advantage of trading using opposite Home Depot and SCCB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SCCB 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 SCCB will offset losses from the drop in SCCB's long position.| Home Depot vs. RLJ Lodging Trust | Home Depot vs. Aquagold International | Home Depot vs. Stepstone Group | Home Depot vs. Morningstar Unconstrained Allocation |
| SCCB vs. Sachem Capital Corp | SCCB vs. Sachem Capital Corp | SCCB vs. B Riley Financial | SCCB vs. Eagle Point Credit |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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