Correlation Between LBG Media and Home Depot
Can any of the company-specific risk be diversified away by investing in both LBG Media 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 LBG Media and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Home Depot, you can compare the effects of market volatilities on LBG Media 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 LBG Media with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Home Depot.
Diversification Opportunities for LBG Media and Home Depot
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LBG and Home is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and LBG Media 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 LBG Media PLC 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 LBG Media i.e., LBG Media and Home Depot go up and down completely randomly.
Pair Corralation between LBG Media and Home Depot
If you would invest 17,857 in Home Depot on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Home Depot or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LBG Media PLC vs. Home Depot
Performance |
Timeline |
LBG Media PLC |
Home Depot |
LBG Media and Home Depot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LBG Media and Home Depot
The main advantage of trading using opposite LBG Media and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media 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.LBG Media vs. SupplyMe Capital PLC | LBG Media vs. SM Energy Co | LBG Media vs. FuelCell Energy | LBG Media vs. Grand Vision Media |
Home Depot vs. Walmart | Home Depot vs. Volkswagen AG | Home Depot vs. Volkswagen AG Non Vtg | Home Depot vs. Compass Group PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |