Correlation Between Home Depot and 015271BA6

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Can any of the company-specific risk be diversified away by investing in both Home Depot and 015271BA6 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 015271BA6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and ARE 475 15 APR 35, you can compare the effects of market volatilities on Home Depot and 015271BA6 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 015271BA6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and 015271BA6.

Diversification Opportunities for Home Depot and 015271BA6

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Home and 015271BA6 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ARE 475 15 APR 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARE 475 15 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 015271BA6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARE 475 15 has no effect on the direction of Home Depot i.e., Home Depot and 015271BA6 go up and down completely randomly.

Pair Corralation between Home Depot and 015271BA6

Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.28 times more return on investment than 015271BA6. However, Home Depot is 1.28 times more volatile than ARE 475 15 APR 35. It trades about 0.06 of its potential returns per unit of risk. ARE 475 15 APR 35 is currently generating about 0.02 per unit of risk. If you would invest  30,557  in Home Depot on August 24, 2024 and sell it today you would earn a total of  11,443  from holding Home Depot or generate 37.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy86.29%
ValuesDaily Returns

Home Depot  vs.  ARE 475 15 APR 35

 Performance 
       Timeline  
Home Depot 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in December 2024.
ARE 475 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ARE 475 15 APR 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ARE 475 15 APR 35 investors.

Home Depot and 015271BA6 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and 015271BA6

The main advantage of trading using opposite Home Depot and 015271BA6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, 015271BA6 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 015271BA6 will offset losses from the drop in 015271BA6's long position.
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The idea behind Home Depot and ARE 475 15 APR 35 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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