Correlation Between Precious Metals and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 Precious Metals and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and HOME DEPOT CDR, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and HOME DEPOT.
Diversification Opportunities for Precious Metals and HOME DEPOT
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Precious and HOME is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR and Precious Metals 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 Precious Metals And 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 CDR has no effect on the direction of Precious Metals i.e., Precious Metals and HOME DEPOT go up and down completely randomly.
Pair Corralation between Precious Metals and HOME DEPOT
Assuming the 90 days trading horizon Precious Metals And is expected to generate 1.38 times more return on investment than HOME DEPOT. However, Precious Metals is 1.38 times more volatile than HOME DEPOT CDR. It trades about -0.1 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about -0.23 per unit of risk. If you would invest 187.00 in Precious Metals And on October 15, 2024 and sell it today you would lose (6.00) from holding Precious Metals And or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. HOME DEPOT CDR
Performance |
| Timeline |
| Precious Metals And |
| HOME DEPOT CDR |
Precious Metals and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and HOME DEPOT
The main advantage of trading using opposite Precious Metals and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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.| Precious Metals vs. Lion One Metals | Precious Metals vs. Mako Mining Corp | Precious Metals vs. CVW CleanTech | Precious Metals vs. Magna Mining |
| HOME DEPOT vs. Pace Metals | HOME DEPOT vs. Dream Office Real | HOME DEPOT vs. Rogers Communications | HOME DEPOT vs. NeuPath Health |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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