Correlation Between Home Depot and CTEEP Companhia
Can any of the company-specific risk be diversified away by investing in both Home Depot and CTEEP 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 CTEEP 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 CTEEP Companhia, you can compare the effects of market volatilities on Home Depot and CTEEP 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 CTEEP Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and CTEEP Companhia.
Diversification Opportunities for Home Depot and CTEEP Companhia
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and CTEEP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Home Depot i.e., Home Depot and CTEEP Companhia go up and down completely randomly.
Pair Corralation between Home Depot and CTEEP Companhia
Assuming the 90 days trading horizon The Home Depot is expected to generate 1.19 times more return on investment than CTEEP Companhia. However, Home Depot is 1.19 times more volatile than CTEEP Companhia. It trades about 0.09 of its potential returns per unit of risk. CTEEP Companhia is currently generating about -0.02 per unit of risk. If you would invest 6,682 in The Home Depot on August 27, 2024 and sell it today you would earn a total of 2,018 from holding The Home Depot or generate 30.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
The Home Depot vs. CTEEP Companhia
Performance |
| Timeline |
| Home Depot |
| CTEEP Companhia |
Home Depot and CTEEP Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and CTEEP Companhia
The main advantage of trading using opposite Home Depot and CTEEP Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, CTEEP 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 CTEEP Companhia will offset losses from the drop in CTEEP Companhia's long position.| Home Depot vs. Fras le SA | Home Depot vs. Clave Indices De | Home Depot vs. BTG Pactual Logstica | Home Depot vs. Telefonaktiebolaget LM Ericsson |
| CTEEP Companhia vs. BB Seguridade Participacoes | CTEEP Companhia vs. Transmissora Aliana de | CTEEP Companhia vs. Itasa Investimentos |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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