Correlation Between Supermarket Income and Home Depot
Can any of the company-specific risk be diversified away by investing in both Supermarket Income 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 Supermarket Income and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supermarket Income REIT and Home Depot, you can compare the effects of market volatilities on Supermarket Income 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 Supermarket Income with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and Home Depot.
Diversification Opportunities for Supermarket Income and Home Depot
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Supermarket and Home is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Supermarket Income 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 Supermarket Income REIT 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 Supermarket Income i.e., Supermarket Income and Home Depot go up and down completely randomly.
Pair Corralation between Supermarket Income and Home Depot
Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the Home Depot. In addition to that, Supermarket Income is 7.19 times more volatile than Home Depot. It trades about -0.04 of its total potential returns per unit of risk. Home Depot is currently generating about 0.09 per unit of volatility. If you would invest 16,193 in Home Depot on October 16, 2024 and sell it today you would earn a total of 1,664 from holding Home Depot or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Supermarket Income REIT vs. Home Depot
Performance |
| Timeline |
| Supermarket Income REIT |
| Home Depot |
Supermarket Income and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supermarket Income and Home Depot
The main advantage of trading using opposite Supermarket Income and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supermarket Income 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.| Supermarket Income vs. Spirent Communications plc | Supermarket Income vs. Cellnex Telecom SA | Supermarket Income vs. Virgin Wines UK | Supermarket Income vs. Atalaya Mining |
| Home Depot vs. MG Credit Income | Home Depot vs. Supermarket Income REIT | Home Depot vs. Naked Wines plc | Home Depot vs. FinecoBank SpA |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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