Correlation Between One Media and Home Depot
Can any of the company-specific risk be diversified away by investing in both One 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 One 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 One Media iP and Home Depot, you can compare the effects of market volatilities on One 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 One Media with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Media and Home Depot.
Diversification Opportunities for One Media and Home Depot
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between One and Home is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and One 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 One Media iP 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 One Media i.e., One Media and Home Depot go up and down completely randomly.
Pair Corralation between One Media and Home Depot
Assuming the 90 days trading horizon One Media iP is expected to generate 11.75 times more return on investment than Home Depot. However, One Media is 11.75 times more volatile than Home Depot. It trades about 0.19 of its potential returns per unit of risk. Home Depot is currently generating about 0.22 per unit of risk. If you would invest 375.00 in One Media iP on September 14, 2024 and sell it today you would earn a total of 50.00 from holding One Media iP or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
One Media iP vs. Home Depot
Performance |
| Timeline |
| One Media iP |
| Home Depot |
One Media and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with One Media and Home Depot
The main advantage of trading using opposite One Media and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One 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.| One Media vs. Catalyst Media Group | One Media vs. CATLIN GROUP | One Media vs. RTW Venture Fund | One Media vs. SANTANDER UK 10 |
| Home Depot vs. One Media iP | Home Depot vs. LBG Media PLC | Home Depot vs. Intermediate Capital Group | Home Depot vs. Catalyst Media Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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