Correlation Between HOME DEPOT and AMAG Austria
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and AMAG Austria 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 AMAG Austria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME DEPOT and AMAG Austria Metall, you can compare the effects of market volatilities on HOME DEPOT and AMAG Austria 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 AMAG Austria. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and AMAG Austria.
Diversification Opportunities for HOME DEPOT and AMAG Austria
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HOME and AMAG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall 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 AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and AMAG Austria go up and down completely randomly.
Pair Corralation between HOME DEPOT and AMAG Austria
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 0.74 times more return on investment than AMAG Austria. However, HOME DEPOT is 1.35 times less risky than AMAG Austria. It trades about 0.14 of its potential returns per unit of risk. AMAG Austria Metall is currently generating about 0.0 per unit of risk. If you would invest 36,075 in HOME DEPOT on November 6, 2024 and sell it today you would earn a total of 3,645 from holding HOME DEPOT or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
HOME DEPOT vs. AMAG Austria Metall
Performance |
| Timeline |
| HOME DEPOT |
| AMAG Austria Metall |
HOME DEPOT and AMAG Austria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and AMAG Austria
The main advantage of trading using opposite HOME DEPOT and AMAG Austria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, AMAG Austria 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 AMAG Austria will offset losses from the drop in AMAG Austria's long position.The idea behind HOME DEPOT and AMAG Austria Metall 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.| AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Norsk Hydro ASA | AMAG Austria vs. Aluminum of | AMAG Austria vs. Alcoa Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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