Correlation Between Home Depot and Media
Can any of the company-specific risk be diversified away by investing in both Home Depot and Media 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 Media 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 Media and Games, you can compare the effects of market volatilities on Home Depot and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Media.
Diversification Opportunities for Home Depot and Media
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Media is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Home Depot i.e., Home Depot and Media go up and down completely randomly.
Pair Corralation between Home Depot and Media
Assuming the 90 days trading horizon Home Depot is expected to generate 1.0 times less return on investment than Media. But when comparing it to its historical volatility, The Home Depot is 3.54 times less risky than Media. It trades about 0.17 of its potential returns per unit of risk. Media and Games is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Media and Games on November 3, 2024 and sell it today you would earn a total of 9.00 from holding Media and Games or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Media and Games
Performance |
| Timeline |
| Home Depot |
| Media and Games |
Home Depot and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Media
The main advantage of trading using opposite Home Depot and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Home Depot vs. DATATEC LTD 2 | Home Depot vs. Linedata Services SA | Home Depot vs. INFORMATION SVC GRP | Home Depot vs. TERADATA |
| Media vs. ARDAGH METAL PACDL 0001 | Media vs. PKSHA TECHNOLOGY INC | Media vs. Air Transport Services | Media vs. Take Two Interactive Software |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |