Correlation Between Home Depot and SES AI
Can any of the company-specific risk be diversified away by investing in both Home Depot and SES AI 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 SES AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and SES AI Corp, you can compare the effects of market volatilities on Home Depot and SES AI 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 SES AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SES AI.
Diversification Opportunities for Home Depot and SES AI
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and SES is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI 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 SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of Home Depot i.e., Home Depot and SES AI go up and down completely randomly.
Pair Corralation between Home Depot and SES AI
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.18 times more return on investment than SES AI. However, Home Depot is 5.65 times less risky than SES AI. It trades about 0.23 of its potential returns per unit of risk. SES AI Corp is currently generating about -0.24 per unit of risk. If you would invest 36,283 in Home Depot on August 31, 2024 and sell it today you would earn a total of 6,436 from holding Home Depot or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. SES AI Corp
Performance |
| Timeline |
| Home Depot |
| SES AI Corp |
Home Depot and SES AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SES AI
The main advantage of trading using opposite Home Depot and SES AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SES AI 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 SES AI will offset losses from the drop in SES AI'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 |
| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI vs. Stoneridge |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |