Correlation Between Home Depot and CLEAN ENERGY
Can any of the company-specific risk be diversified away by investing in both Home Depot and CLEAN ENERGY 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 CLEAN ENERGY 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 CLEAN ENERGY FUELS, you can compare the effects of market volatilities on Home Depot and CLEAN ENERGY 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 CLEAN ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and CLEAN ENERGY.
Diversification Opportunities for Home Depot and CLEAN ENERGY
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and CLEAN is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and CLEAN ENERGY FUELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEAN ENERGY FUELS 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 CLEAN ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEAN ENERGY FUELS has no effect on the direction of Home Depot i.e., Home Depot and CLEAN ENERGY go up and down completely randomly.
Pair Corralation between Home Depot and CLEAN ENERGY
Assuming the 90 days trading horizon The Home Depot is expected to under-perform the CLEAN ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 2.73 times less risky than CLEAN ENERGY. The stock trades about -0.04 of its potential returns per unit of risk. The CLEAN ENERGY FUELS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 290.00 in CLEAN ENERGY FUELS on October 10, 2024 and sell it today you would lose (2.00) from holding CLEAN ENERGY FUELS or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. CLEAN ENERGY FUELS
Performance |
| Timeline |
| Home Depot |
| CLEAN ENERGY FUELS |
Home Depot and CLEAN ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and CLEAN ENERGY
The main advantage of trading using opposite Home Depot and CLEAN ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, CLEAN ENERGY 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 CLEAN ENERGY will offset losses from the drop in CLEAN ENERGY's long position.| Home Depot vs. TT Electronics PLC | Home Depot vs. Motorcar Parts of | Home Depot vs. CarsalesCom | Home Depot vs. Nucletron Electronic Aktiengesellschaft |
| CLEAN ENERGY vs. HOCHSCHILD MINING | CLEAN ENERGY vs. OURGAME INTHOLDL 00005 | CLEAN ENERGY vs. Plastic Omnium | CLEAN ENERGY vs. QINGCI GAMES INC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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