Correlation Between Home Depot and SEP Acquisition
Can any of the company-specific risk be diversified away by investing in both Home Depot and SEP Acquisition 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 SEP Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and SEP Acquisition Corp, you can compare the effects of market volatilities on Home Depot and SEP Acquisition 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 SEP Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SEP Acquisition.
Diversification Opportunities for Home Depot and SEP Acquisition
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and SEP is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition 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 SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of Home Depot i.e., Home Depot and SEP Acquisition go up and down completely randomly.
Pair Corralation between Home Depot and SEP Acquisition
If you would invest 40,097 in Home Depot on September 13, 2024 and sell it today you would earn a total of 1,345 from holding Home Depot or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Home Depot vs. SEP Acquisition Corp
Performance |
| Timeline |
| Home Depot |
| SEP Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and SEP Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SEP Acquisition
The main advantage of trading using opposite Home Depot and SEP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SEP Acquisition 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 SEP Acquisition will offset losses from the drop in SEP Acquisition's long position.| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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