Correlation Between Home Depot and Scottish Mortgage
Can any of the company-specific risk be diversified away by investing in both Home Depot and Scottish Mortgage 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 Scottish Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Scottish Mortgage Investment, you can compare the effects of market volatilities on Home Depot and Scottish Mortgage 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 Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Scottish Mortgage.
Diversification Opportunities for Home Depot and Scottish Mortgage
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Scottish is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 The Home Depot are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Home Depot i.e., Home Depot and Scottish Mortgage go up and down completely randomly.
Pair Corralation between Home Depot and Scottish Mortgage
Assuming the 90 days trading horizon Home Depot is expected to generate 1.03 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, The Home Depot is 1.2 times less risky than Scottish Mortgage. It trades about 0.06 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 846.00 in Scottish Mortgage Investment on October 16, 2024 and sell it today you would earn a total of 328.00 from holding Scottish Mortgage Investment or generate 38.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Scottish Mortgage Investment
Performance |
| Timeline |
| Home Depot |
| Scottish Mortgage |
Home Depot and Scottish Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Scottish Mortgage
The main advantage of trading using opposite Home Depot and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Scottish Mortgage 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 Scottish Mortgage will offset losses from the drop in Scottish Mortgage's long position.| Home Depot vs. PLAY2CHILL SA ZY | Home Depot vs. ADDUS HOMECARE | Home Depot vs. PLAYTIKA HOLDING DL 01 | Home Depot vs. Aedas Homes SA |
| Scottish Mortgage vs. Gruppo Mutuionline SpA | Scottish Mortgage vs. Corsair Gaming | Scottish Mortgage vs. ALTAIR RES INC | Scottish Mortgage vs. JAPAN TOBACCO UNSPADR12 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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