Correlation Between Telecom Plus and Home Depot
Can any of the company-specific risk be diversified away by investing in both Telecom Plus 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 Telecom Plus and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Plus PLC and Home Depot, you can compare the effects of market volatilities on Telecom Plus 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 Telecom Plus with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Plus and Home Depot.
Diversification Opportunities for Telecom Plus and Home Depot
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telecom and Home is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Plus PLC and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Telecom Plus 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 Telecom Plus PLC 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 Telecom Plus i.e., Telecom Plus and Home Depot go up and down completely randomly.
Pair Corralation between Telecom Plus and Home Depot
Assuming the 90 days trading horizon Telecom Plus PLC is expected to generate 4.57 times more return on investment than Home Depot. However, Telecom Plus is 4.57 times more volatile than Home Depot. It trades about 0.19 of its potential returns per unit of risk. Home Depot is currently generating about 0.22 per unit of risk. If you would invest 166,796 in Telecom Plus PLC on September 13, 2024 and sell it today you would earn a total of 8,804 from holding Telecom Plus PLC or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telecom Plus PLC vs. Home Depot
Performance |
| Timeline |
| Telecom Plus PLC |
| Home Depot |
Telecom Plus and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Plus and Home Depot
The main advantage of trading using opposite Telecom Plus and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Plus 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.| Telecom Plus vs. Home Depot | Telecom Plus vs. Weiss Korea Opportunity | Telecom Plus vs. River and Mercantile | Telecom Plus vs. Chrysalis Investments |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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