Correlation Between Home Depot and EDPPL

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Can any of the company-specific risk be diversified away by investing in both Home Depot and EDPPL 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 EDPPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and EDPPL 171 24 JAN 28, you can compare the effects of market volatilities on Home Depot and EDPPL 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 EDPPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and EDPPL.

Diversification Opportunities for Home Depot and EDPPL

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Home and EDPPL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and EDPPL 171 24 JAN 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDPPL 171 24 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 EDPPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDPPL 171 24 has no effect on the direction of Home Depot i.e., Home Depot and EDPPL go up and down completely randomly.

Pair Corralation between Home Depot and EDPPL

Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.61 times more return on investment than EDPPL. However, Home Depot is 1.61 times more volatile than EDPPL 171 24 JAN 28. It trades about 0.13 of its potential returns per unit of risk. EDPPL 171 24 JAN 28 is currently generating about -0.05 per unit of risk. If you would invest  33,610  in Home Depot on September 3, 2024 and sell it today you would earn a total of  9,303  from holding Home Depot or generate 27.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy65.07%
ValuesDaily Returns

Home Depot  vs.  EDPPL 171 24 JAN 28

 Performance 
       Timeline  
Home Depot 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Home Depot exhibited solid returns over the last few months and may actually be approaching a breakup point.
EDPPL 171 24 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EDPPL 171 24 JAN 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 EDPPL 171 24 JAN 28 investors.

Home Depot and EDPPL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and EDPPL

The main advantage of trading using opposite Home Depot and EDPPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, EDPPL 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 EDPPL will offset losses from the drop in EDPPL's long position.
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The idea behind Home Depot and EDPPL 171 24 JAN 28 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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