Correlation Between Home Depot and Mid America
Can any of the company-specific risk be diversified away by investing in both Home Depot and Mid America 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 Mid America 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 Mid America Apartment Communities, you can compare the effects of market volatilities on Home Depot and Mid America 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 Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Mid America.
Diversification Opportunities for Home Depot and Mid America
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and Mid is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Home Depot i.e., Home Depot and Mid America go up and down completely randomly.
Pair Corralation between Home Depot and Mid America
Assuming the 90 days trading horizon The Home Depot is expected to under-perform the Mid America. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 1.16 times less risky than Mid America. The stock trades about -0.24 of its potential returns per unit of risk. The Mid America Apartment Communities is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 21,996 in Mid America Apartment Communities on October 7, 2024 and sell it today you would earn a total of 1,500 from holding Mid America Apartment Communities or generate 6.82% 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. Mid America Apartment Communit
Performance |
| Timeline |
| Home Depot |
| Mid America Apartment |
Home Depot and Mid America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Mid America
The main advantage of trading using opposite Home Depot and Mid America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Mid America 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 Mid America will offset losses from the drop in Mid America's long position.| Home Depot vs. Brpr Corporate Offices | Home Depot vs. MP Materials Corp | Home Depot vs. Melco Resorts Entertainment | Home Depot vs. JB Hunt Transport |
| Mid America vs. Guidewire Software, | Mid America vs. Omega Healthcare Investors, | Mid America vs. JB Hunt Transport | Mid America vs. Fresenius Medical Care |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |