Correlation Between Stag Industrial and Home Depot
Can any of the company-specific risk be diversified away by investing in both Stag Industrial 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 Stag Industrial and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stag Industrial and The Home Depot, you can compare the effects of market volatilities on Stag Industrial 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 Stag Industrial with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stag Industrial and Home Depot.
Diversification Opportunities for Stag Industrial and Home Depot
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stag and Home is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Stag Industrial 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 Stag Industrial 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 Stag Industrial i.e., Stag Industrial and Home Depot go up and down completely randomly.
Pair Corralation between Stag Industrial and Home Depot
Assuming the 90 days trading horizon Stag Industrial is expected to under-perform the Home Depot. In addition to that, Stag Industrial is 1.26 times more volatile than The Home Depot. It trades about -0.15 of its total potential returns per unit of risk. The Home Depot is currently generating about -0.17 per unit of volatility. If you would invest 39,525 in The Home Depot on October 17, 2024 and sell it today you would lose (1,455) from holding The Home Depot or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Stag Industrial vs. The Home Depot
Performance |
| Timeline |
| Stag Industrial |
| Home Depot |
Stag Industrial and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stag Industrial and Home Depot
The main advantage of trading using opposite Stag Industrial and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stag Industrial 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.| Stag Industrial vs. SEALED AIR | Stag Industrial vs. Lery Seafood Group | Stag Industrial vs. WIZZ AIR HLDGUNSPADR4 | Stag Industrial vs. CHINA SOUTHN AIR H |
| Home Depot vs. MOVIE GAMES SA | Home Depot vs. Take Two Interactive Software | Home Depot vs. GRIFFIN MINING LTD | Home Depot vs. Stag Industrial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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