Correlation Between Home Depot and Applied Materials,
Can any of the company-specific risk be diversified away by investing in both Home Depot and Applied Materials, 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 Applied Materials, 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 Applied Materials,, you can compare the effects of market volatilities on Home Depot and Applied Materials, 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 Applied Materials,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Applied Materials,.
Diversification Opportunities for Home Depot and Applied Materials,
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Applied is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Applied Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials, 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 Applied Materials,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials, has no effect on the direction of Home Depot i.e., Home Depot and Applied Materials, go up and down completely randomly.
Pair Corralation between Home Depot and Applied Materials,
Assuming the 90 days trading horizon Home Depot is expected to generate 3.91 times less return on investment than Applied Materials,. But when comparing it to its historical volatility, The Home Depot is 1.81 times less risky than Applied Materials,. It trades about 0.06 of its potential returns per unit of risk. Applied Materials, is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 10,287 in Applied Materials, on October 28, 2024 and sell it today you would earn a total of 773.00 from holding Applied Materials, or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Applied Materials,
Performance |
| Timeline |
| Home Depot |
| Applied Materials, |
Home Depot and Applied Materials, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Applied Materials,
The main advantage of trading using opposite Home Depot and Applied Materials, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Applied Materials, 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 Applied Materials, will offset losses from the drop in Applied Materials,'s long position.| Home Depot vs. Tyson Foods | Home Depot vs. GP Investments | Home Depot vs. Hormel Foods | Home Depot vs. Westinghouse Air Brake |
| Applied Materials, vs. ASML Holding NV | Applied Materials, vs. Lam Research | Applied Materials, vs. Avery Dennison | Applied Materials, vs. Marfrig Global Foods |
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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