Correlation Between Home Depot and SunCar Technology
Can any of the company-specific risk be diversified away by investing in both Home Depot and SunCar Technology 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 SunCar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and SunCar Technology Group, you can compare the effects of market volatilities on Home Depot and SunCar Technology 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 SunCar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SunCar Technology.
Diversification Opportunities for Home Depot and SunCar Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and SunCar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SunCar Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCar Technology 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 SunCar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCar Technology has no effect on the direction of Home Depot i.e., Home Depot and SunCar Technology go up and down completely randomly.
Pair Corralation between Home Depot and SunCar Technology
Allowing for the 90-day total investment horizon Home Depot is expected to generate 17.48 times less return on investment than SunCar Technology. But when comparing it to its historical volatility, Home Depot is 16.51 times less risky than SunCar Technology. It trades about 0.09 of its potential returns per unit of risk. SunCar Technology Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 19.00 in SunCar Technology Group on August 31, 2024 and sell it today you would earn a total of 15.76 from holding SunCar Technology Group or generate 82.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.41% |
| Values | Daily Returns |
Home Depot vs. SunCar Technology Group
Performance |
| Timeline |
| Home Depot |
| SunCar Technology |
Home Depot and SunCar Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SunCar Technology
The main advantage of trading using opposite Home Depot and SunCar Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SunCar Technology 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 SunCar Technology will offset losses from the drop in SunCar Technology'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 |
| SunCar Technology vs. Nascent Wine | SunCar Technology vs. Teleflex Incorporated | SunCar Technology vs. Oatly Group AB | SunCar Technology vs. Willamette Valley Vineyards |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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