Correlation Between IPC MEXICO and Home Depot
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO 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 IPC MEXICO and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and The Home Depot, you can compare the effects of market volatilities on IPC MEXICO 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 IPC MEXICO with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Home Depot.
Diversification Opportunities for IPC MEXICO and Home Depot
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IPC and Home is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and Home Depot go up and down completely randomly.
Pair Corralation between IPC MEXICO and Home Depot
Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the Home Depot. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 1.62 times less risky than Home Depot. The index trades about -0.06 of its potential returns per unit of risk. The The Home Depot is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 575,246 in The Home Depot on September 1, 2024 and sell it today you would earn a total of 297,851 from holding The Home Depot or generate 51.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
IPC MEXICO vs. The Home Depot
Performance |
| Timeline |
IPC MEXICO and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
The Home Depot
Pair trading matchups for Home Depot
Pair Trading with IPC MEXICO and Home Depot
The main advantage of trading using opposite IPC MEXICO and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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.| IPC MEXICO vs. First Republic Bank | IPC MEXICO vs. McEwen Mining | IPC MEXICO vs. Applied Materials | IPC MEXICO vs. CVS Health |
| Home Depot vs. Deutsche Bank Aktiengesellschaft | Home Depot vs. First Republic Bank | Home Depot vs. Monster Beverage Corp | Home Depot vs. Grupo Hotelero Santa |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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