Correlation Between Indutrade and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Indutrade 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 Indutrade and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and HOME DEPOT, you can compare the effects of market volatilities on Indutrade 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 Indutrade with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and HOME DEPOT.
Diversification Opportunities for Indutrade and HOME DEPOT
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indutrade and HOME is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and HOME DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT and Indutrade 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 Indutrade AB 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 Indutrade i.e., Indutrade and HOME DEPOT go up and down completely randomly.
Pair Corralation between Indutrade and HOME DEPOT
Assuming the 90 days horizon Indutrade AB is expected to generate 1.29 times more return on investment than HOME DEPOT. However, Indutrade is 1.29 times more volatile than HOME DEPOT. It trades about 0.25 of its potential returns per unit of risk. HOME DEPOT is currently generating about 0.18 per unit of risk. If you would invest 2,392 in Indutrade AB on October 25, 2024 and sell it today you would earn a total of 172.00 from holding Indutrade AB or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. HOME DEPOT
Performance |
| Timeline |
| Indutrade AB |
| HOME DEPOT |
Indutrade and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and HOME DEPOT
The main advantage of trading using opposite Indutrade and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade 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.| Indutrade vs. Fastenal Company | Indutrade vs. Superior Plus Corp | Indutrade vs. Origin Agritech | Indutrade vs. Identiv |
| HOME DEPOT vs. BRIT AMER TOBACCO | HOME DEPOT vs. FAST RETAIL ADR | HOME DEPOT vs. Indutrade AB | HOME DEPOT vs. JAPAN TOBACCO UNSPADR12 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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