Correlation Between Industria and Home Capital
Can any of the company-specific risk be diversified away by investing in both Industria and Home Capital 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 Industria and Home Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseno and Home Capital Rentals, you can compare the effects of market volatilities on Industria and Home Capital 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 Industria with a short position of Home Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Home Capital.
Diversification Opportunities for Industria and Home Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Industria and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Home Capital Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Capital Rentals and Industria 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 Industria de Diseno are associated (or correlated) with Home Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Capital Rentals has no effect on the direction of Industria i.e., Industria and Home Capital go up and down completely randomly.
Pair Corralation between Industria and Home Capital
Assuming the 90 days trading horizon Industria de Diseno is expected to generate 1.47 times more return on investment than Home Capital. However, Industria is 1.47 times more volatile than Home Capital Rentals. It trades about 0.11 of its potential returns per unit of risk. Home Capital Rentals is currently generating about 0.0 per unit of risk. If you would invest 3,390 in Industria de Diseno on August 28, 2024 and sell it today you would earn a total of 1,912 from holding Industria de Diseno or generate 56.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 38.16% |
| Values | Daily Returns |
Industria de Diseno vs. Home Capital Rentals
Performance |
| Timeline |
| Industria de Diseno |
| Home Capital Rentals |
Industria and Home Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industria and Home Capital
The main advantage of trading using opposite Industria and Home Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria position performs unexpectedly, Home Capital 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 Capital will offset losses from the drop in Home Capital's long position.| Industria vs. Iberdrola SA | Industria vs. Repsol | Industria vs. Banco Santander | Industria vs. ACS Actividades de |
| Home Capital vs. Inhome Prime Properties | Home Capital vs. Borges Agricultural Industrial | Home Capital vs. Squirrel Media SA | Home Capital vs. Cellnex Telecom SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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