Correlation Between Retail Estates and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and HOME DEPOT, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and HOME DEPOT.
Diversification Opportunities for Retail Estates and HOME DEPOT
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and HOME is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and HOME DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and HOME DEPOT go up and down completely randomly.
Pair Corralation between Retail Estates and HOME DEPOT
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the HOME DEPOT. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.23 times less risky than HOME DEPOT. The stock trades about -0.13 of its potential returns per unit of risk. The HOME DEPOT is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 37,570 in HOME DEPOT on November 7, 2024 and sell it today you would earn a total of 2,095 from holding HOME DEPOT or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Retail Estates NV vs. HOME DEPOT
Performance |
| Timeline |
| Retail Estates NV |
| HOME DEPOT |
Retail Estates and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and HOME DEPOT
The main advantage of trading using opposite Retail Estates and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Elmos Semiconductor SE | Retail Estates vs. CHINA TELECOM H | Retail Estates vs. Cairo Communication SpA | Retail Estates vs. Nordic Semiconductor ASA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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