Correlation Between Home Depot and Atacado SA
Can any of the company-specific risk be diversified away by investing in both Home Depot and Atacado SA 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 Atacado SA 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 Atacado SA, you can compare the effects of market volatilities on Home Depot and Atacado SA 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 Atacado SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Atacado SA.
Diversification Opportunities for Home Depot and Atacado SA
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Atacado is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Atacado SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacado SA 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 Atacado SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacado SA has no effect on the direction of Home Depot i.e., Home Depot and Atacado SA go up and down completely randomly.
Pair Corralation between Home Depot and Atacado SA
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.4 times more return on investment than Atacado SA. However, The Home Depot is 2.48 times less risky than Atacado SA. It trades about 0.29 of its potential returns per unit of risk. Atacado SA is currently generating about -0.15 per unit of risk. If you would invest 7,274 in The Home Depot on September 2, 2024 and sell it today you would earn a total of 1,803 from holding The Home Depot or generate 24.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Atacado SA
Performance |
| Timeline |
| Home Depot |
| Atacado SA |
Home Depot and Atacado SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Atacado SA
The main advantage of trading using opposite Home Depot and Atacado SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Atacado SA 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 Atacado SA will offset losses from the drop in Atacado SA's long position.| Home Depot vs. Fras le SA | Home Depot vs. Western Digital | Home Depot vs. Energisa SA | Home Depot vs. Clave Indices De |
| Atacado SA vs. Companhia Siderrgica Nacional | Atacado SA vs. Cyrela Brazil Realty | Atacado SA vs. Fras le SA | Atacado SA vs. Energisa SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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