Correlation Between BANK MANDIRI and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI 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 BANK MANDIRI and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and HOME DEPOT, you can compare the effects of market volatilities on BANK MANDIRI 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 BANK MANDIRI with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and HOME DEPOT.
Diversification Opportunities for BANK MANDIRI and HOME DEPOT
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and HOME is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and HOME DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT and BANK MANDIRI 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 BANK MANDIRI 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 BANK MANDIRI i.e., BANK MANDIRI and HOME DEPOT go up and down completely randomly.
Pair Corralation between BANK MANDIRI and HOME DEPOT
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.35 times more return on investment than HOME DEPOT. However, BANK MANDIRI is 1.35 times more volatile than HOME DEPOT. It trades about 0.34 of its potential returns per unit of risk. HOME DEPOT is currently generating about 0.32 per unit of risk. If you would invest 32.00 in BANK MANDIRI on October 23, 2024 and sell it today you would earn a total of 3.00 from holding BANK MANDIRI or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
BANK MANDIRI vs. HOME DEPOT
Performance |
| Timeline |
| BANK MANDIRI |
| HOME DEPOT |
BANK MANDIRI and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and HOME DEPOT
The main advantage of trading using opposite BANK MANDIRI and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI 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.| BANK MANDIRI vs. UNIVERSAL MUSIC GROUP | BANK MANDIRI vs. PNC Financial Services | BANK MANDIRI vs. Gaztransport Technigaz SA | BANK MANDIRI vs. Warner Music 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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