Correlation Between HOME DEPOT and China Eastern
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and China Eastern 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 China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME DEPOT and China Eastern Airlines, you can compare the effects of market volatilities on HOME DEPOT and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and China Eastern.
Diversification Opportunities for HOME DEPOT and China Eastern
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HOME and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and China Eastern go up and down completely randomly.
Pair Corralation between HOME DEPOT and China Eastern
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 0.44 times more return on investment than China Eastern. However, HOME DEPOT is 2.25 times less risky than China Eastern. It trades about 0.17 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.07 per unit of risk. If you would invest 37,715 in HOME DEPOT on November 4, 2024 and sell it today you would earn a total of 1,880 from holding HOME DEPOT or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
HOME DEPOT vs. China Eastern Airlines
Performance |
| Timeline |
| HOME DEPOT |
| China Eastern Airlines |
HOME DEPOT and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and China Eastern
The main advantage of trading using opposite HOME DEPOT and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| HOME DEPOT vs. DICKS Sporting Goods | HOME DEPOT vs. Hemisphere Energy Corp | HOME DEPOT vs. Zoom Video Communications | HOME DEPOT vs. USWE SPORTS AB |
| China Eastern vs. Dalata Hotel Group | China Eastern vs. MELIA HOTELS | China Eastern vs. NH HOTEL GROUP | China Eastern vs. HYATT HOTELS A |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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