Correlation Between Home Depot and Tradegate
Can any of the company-specific risk be diversified away by investing in both Home Depot and Tradegate 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 Tradegate 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 Tradegate AG Wertpapierhandelsbank, you can compare the effects of market volatilities on Home Depot and Tradegate 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 Tradegate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Tradegate.
Diversification Opportunities for Home Depot and Tradegate
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Home and Tradegate is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Tradegate AG Wertpapierhandels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradegate AG Wertpap 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 Tradegate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradegate AG Wertpap has no effect on the direction of Home Depot i.e., Home Depot and Tradegate go up and down completely randomly.
Pair Corralation between Home Depot and Tradegate
Assuming the 90 days trading horizon The Home Depot is expected to under-perform the Tradegate. In addition to that, Home Depot is 4.58 times more volatile than Tradegate AG Wertpapierhandelsbank. It trades about -0.17 of its total potential returns per unit of risk. Tradegate AG Wertpapierhandelsbank is currently generating about -0.24 per unit of volatility. If you would invest 8,850 in Tradegate AG Wertpapierhandelsbank on October 17, 2024 and sell it today you would lose (100.00) from holding Tradegate AG Wertpapierhandelsbank or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Tradegate AG Wertpapierhandels
Performance |
| Timeline |
| Home Depot |
| Tradegate AG Wertpap |
Home Depot and Tradegate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Tradegate
The main advantage of trading using opposite Home Depot and Tradegate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Tradegate 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 Tradegate will offset losses from the drop in Tradegate'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 |
| Tradegate vs. DFS Furniture PLC | Tradegate vs. INVITATION HOMES DL | Tradegate vs. The Home Depot | Tradegate vs. FAST RETAIL ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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