Correlation Between ÜSTRA Hannoversche and Home Depot

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ÜSTRA Hannoversche and Home Depot 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 ÜSTRA Hannoversche and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRA Hannoversche Verkehrsbetriebe and The Home Depot, you can compare the effects of market volatilities on ÜSTRA Hannoversche and Home Depot 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 ÜSTRA Hannoversche with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of ÜSTRA Hannoversche and Home Depot.

Diversification Opportunities for ÜSTRA Hannoversche and Home Depot

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ÜSTRA and Home is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding STRA Hannoversche Verkehrsbetr and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and ÜSTRA Hannoversche 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 STRA Hannoversche Verkehrsbetriebe are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of ÜSTRA Hannoversche i.e., ÜSTRA Hannoversche and Home Depot go up and down completely randomly.

Pair Corralation between ÜSTRA Hannoversche and Home Depot

Assuming the 90 days horizon STRA Hannoversche Verkehrsbetriebe is expected to under-perform the Home Depot. In addition to that, ÜSTRA Hannoversche is 1.3 times more volatile than The Home Depot. It trades about -0.33 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.41 per unit of volatility. If you would invest  35,974  in The Home Depot on September 1, 2024 and sell it today you would earn a total of  4,711  from holding The Home Depot or generate 13.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

STRA Hannoversche Verkehrsbetr  vs.  The Home Depot

 Performance 
       Timeline  
ÜSTRA Hannoversche 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Home Depot 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in The Home Depot are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward indicators, Home Depot unveiled solid returns over the last few months and may actually be approaching a breakup point.

ÜSTRA Hannoversche and Home Depot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ÜSTRA Hannoversche and Home Depot

The main advantage of trading using opposite ÜSTRA Hannoversche and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ÜSTRA Hannoversche position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.
The idea behind STRA Hannoversche Verkehrsbetriebe and The Home Depot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

Other Complementary Tools

Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
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
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency