Correlation Between Home Depot and Companhia
Can any of the company-specific risk be diversified away by investing in both Home Depot and Companhia 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 Companhia 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 Companhia de Saneamento, you can compare the effects of market volatilities on Home Depot and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Companhia.
Diversification Opportunities for Home Depot and Companhia
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Companhia is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Home Depot i.e., Home Depot and Companhia go up and down completely randomly.
Pair Corralation between Home Depot and Companhia
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.94 times more return on investment than Companhia. However, The Home Depot is 1.06 times less risky than Companhia. It trades about 0.33 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.1 per unit of risk. If you would invest 8,107 in The Home Depot on August 30, 2024 and sell it today you would earn a total of 785.00 from holding The Home Depot or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Home Depot vs. Companhia de Saneamento
Performance |
| Timeline |
| Home Depot |
| Companhia de Saneamento |
Home Depot and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Companhia
The main advantage of trading using opposite Home Depot and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Home Depot vs. Bombril SA | Home Depot vs. Banco do Estado | Home Depot vs. CA Modas SA | Home Depot vs. Direcional Engenharia SA |
| Companhia vs. BB Seguridade Participacoes | Companhia vs. Transmissora Aliana de | Companhia vs. Alupar Investimento SA | Companhia vs. Banco do Estado |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |