Correlation Between Marvell Technology and Home Depot
Can any of the company-specific risk be diversified away by investing in both Marvell Technology 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 Marvell Technology and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marvell Technology and The Home Depot, you can compare the effects of market volatilities on Marvell Technology 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 Marvell Technology with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Home Depot.
Diversification Opportunities for Marvell Technology and Home Depot
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marvell and Home is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Marvell Technology 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 Marvell Technology 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 Marvell Technology i.e., Marvell Technology and Home Depot go up and down completely randomly.
Pair Corralation between Marvell Technology and Home Depot
Assuming the 90 days trading horizon Marvell Technology is expected to under-perform the Home Depot. In addition to that, Marvell Technology is 2.98 times more volatile than The Home Depot. It trades about -0.07 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.03 per unit of volatility. If you would invest 8,477 in The Home Depot on November 5, 2024 and sell it today you would earn a total of 50.00 from holding The Home Depot or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marvell Technology vs. The Home Depot
Performance |
| Timeline |
| Marvell Technology |
| Home Depot |
Marvell Technology and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and Home Depot
The main advantage of trading using opposite Marvell Technology and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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.| Marvell Technology vs. Taiwan Semiconductor Manufacturing | Marvell Technology vs. Apple Inc | Marvell Technology vs. Alibaba Group Holding | Marvell Technology vs. Microsoft |
| Home Depot vs. METISA Metalrgica Timboense | Home Depot vs. Metalurgica Gerdau SA | Home Depot vs. Tres Tentos Agroindustrial | Home Depot vs. JB Hunt Transport |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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