Correlation Between MG Credit and Home Depot
Can any of the company-specific risk be diversified away by investing in both MG Credit 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 MG Credit and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MG Credit Income and Home Depot, you can compare the effects of market volatilities on MG Credit 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 MG Credit with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of MG Credit and Home Depot.
Diversification Opportunities for MG Credit and Home Depot
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between MGCI and Home is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding MG Credit Income and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and MG Credit 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 MG Credit Income 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 MG Credit i.e., MG Credit and Home Depot go up and down completely randomly.
Pair Corralation between MG Credit and Home Depot
If you would invest 9,620 in MG Credit Income on October 30, 2024 and sell it today you would earn a total of 40.00 from holding MG Credit Income or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MG Credit Income vs. Home Depot
Performance |
| Timeline |
| MG Credit Income |
| Home Depot |
MG Credit and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MG Credit and Home Depot
The main advantage of trading using opposite MG Credit and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MG Credit 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.| MG Credit vs. Leroy Seafood Group | MG Credit vs. Tyson Foods Cl | MG Credit vs. Infrastrutture Wireless Italiane | MG Credit vs. Ebro Foods |
| Home Depot vs. Capital Drilling | Home Depot vs. Raymond James Financial | Home Depot vs. Compal Electronics GDR | Home Depot vs. Berner Kantonalbank AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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