Correlation Between Home Depot and Spero Therapeutics
Can any of the company-specific risk be diversified away by investing in both Home Depot and Spero Therapeutics 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 Spero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Spero Therapeutics, you can compare the effects of market volatilities on Home Depot and Spero Therapeutics 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 Spero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Spero Therapeutics.
Diversification Opportunities for Home Depot and Spero Therapeutics
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Spero is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics 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 Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Home Depot i.e., Home Depot and Spero Therapeutics go up and down completely randomly.
Pair Corralation between Home Depot and Spero Therapeutics
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.48 times more return on investment than Spero Therapeutics. However, Home Depot is 2.08 times less risky than Spero Therapeutics. It trades about 0.15 of its potential returns per unit of risk. Spero Therapeutics is currently generating about -0.04 per unit of risk. If you would invest 32,446 in Home Depot on August 24, 2024 and sell it today you would earn a total of 8,599 from holding Home Depot or generate 26.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Home Depot vs. Spero Therapeutics
Performance |
| Timeline |
| Home Depot |
| Spero Therapeutics |
Home Depot and Spero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Spero Therapeutics
The main advantage of trading using opposite Home Depot and Spero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Spero Therapeutics 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 Spero Therapeutics will offset losses from the drop in Spero Therapeutics' long position.| Home Depot vs. Small Cap Core | Home Depot vs. Freedom Holding Corp | Home Depot vs. Gfl Environmental Holdings | Home Depot vs. Growth Fund Of |
| Spero Therapeutics vs. Assembly Biosciences | Spero Therapeutics vs. Achilles Therapeutics PLC | Spero Therapeutics vs. Instil Bio | Spero Therapeutics vs. CytomX Therapeutics |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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