Correlation Between Home Depot and G2D Investments
Can any of the company-specific risk be diversified away by investing in both Home Depot and G2D Investments 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 G2D Investments 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 G2D Investments, you can compare the effects of market volatilities on Home Depot and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and G2D Investments.
Diversification Opportunities for Home Depot and G2D Investments
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and G2D is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Home Depot i.e., Home Depot and G2D Investments go up and down completely randomly.
Pair Corralation between Home Depot and G2D Investments
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.52 times more return on investment than G2D Investments. However, The Home Depot is 1.91 times less risky than G2D Investments. It trades about 0.13 of its potential returns per unit of risk. G2D Investments is currently generating about -0.1 per unit of risk. If you would invest 8,226 in The Home Depot on September 13, 2024 and sell it today you would earn a total of 631.00 from holding The Home Depot or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
The Home Depot vs. G2D Investments
Performance |
| Timeline |
| Home Depot |
| G2D Investments |
Home Depot and G2D Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and G2D Investments
The main advantage of trading using opposite Home Depot and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.| Home Depot vs. Fundo Investimento Imobiliario | Home Depot vs. LESTE FDO INV | Home Depot vs. Fras le SA | Home Depot vs. Western Digital |
| G2D Investments vs. Tres Tentos Agroindustrial | G2D Investments vs. Nordon Indstrias Metalrgicas | G2D Investments vs. Multilaser Industrial SA | G2D Investments vs. Palantir Technologies |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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