Correlation Between Promotora and Home Depot
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and The Home Depot, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Home Depot.
Diversification Opportunities for Promotora and Home Depot
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Promotora and Home is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Home Depot go up and down completely randomly.
Pair Corralation between Promotora and Home Depot
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.08 times more return on investment than Home Depot. However, Promotora is 1.08 times more volatile than The Home Depot. It trades about 0.34 of its potential returns per unit of risk. The Home Depot is currently generating about 0.31 per unit of risk. If you would invest 17,400 in Promotora y Operadora on September 2, 2024 and sell it today you would earn a total of 2,106 from holding Promotora y Operadora or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. The Home Depot
Performance |
| Timeline |
| Promotora y Operadora |
| Home Depot |
Promotora and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Home Depot
The main advantage of trading using opposite Promotora and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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