Correlation Between HomeToGo and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both HomeToGo and EDISON INTL 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 HomeToGo and EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and EDISON INTL, you can compare the effects of market volatilities on HomeToGo and EDISON INTL 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 HomeToGo with a short position of EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and EDISON INTL.
Diversification Opportunities for HomeToGo and EDISON INTL
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HomeToGo and EDISON is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL and HomeToGo 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 HomeToGo SE are associated (or correlated) with EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of HomeToGo i.e., HomeToGo and EDISON INTL go up and down completely randomly.
Pair Corralation between HomeToGo and EDISON INTL
Assuming the 90 days trading horizon HomeToGo SE is expected to generate 1.49 times more return on investment than EDISON INTL. However, HomeToGo is 1.49 times more volatile than EDISON INTL. It trades about -0.07 of its potential returns per unit of risk. EDISON INTL is currently generating about -0.34 per unit of risk. If you would invest 202.00 in HomeToGo SE on November 27, 2024 and sell it today you would lose (8.00) from holding HomeToGo SE or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. EDISON INTL
Performance |
| Timeline |
| HomeToGo SE |
| EDISON INTL |
HomeToGo and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and EDISON INTL
The main advantage of trading using opposite HomeToGo and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| HomeToGo vs. BlueScope Steel Limited | HomeToGo vs. SINGAPORE AIRLINES | HomeToGo vs. China Southern Airlines | HomeToGo vs. Nippon Steel |
| EDISON INTL vs. Scandinavian Tobacco Group | EDISON INTL vs. SmarTone Telecommunications Holdings | EDISON INTL vs. Singapore Telecommunications Limited | EDISON INTL vs. Coor Service Management |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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