Correlation Between MUNRE and Home Depot
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By analyzing existing cross correlation between MUNRE 5875 23 MAY 42 and Home Depot, you can compare the effects of market volatilities on MUNRE 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 MUNRE with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of MUNRE and Home Depot.
Diversification Opportunities for MUNRE and Home Depot
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MUNRE and Home is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MUNRE 5875 23 MAY 42 and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and MUNRE 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 MUNRE 5875 23 MAY 42 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 MUNRE i.e., MUNRE and Home Depot go up and down completely randomly.
Pair Corralation between MUNRE and Home Depot
Assuming the 90 days trading horizon MUNRE 5875 23 MAY 42 is expected to generate 4.42 times more return on investment than Home Depot. However, MUNRE is 4.42 times more volatile than Home Depot. It trades about 0.03 of its potential returns per unit of risk. Home Depot is currently generating about 0.14 per unit of risk. If you would invest 9,950 in MUNRE 5875 23 MAY 42 on September 12, 2024 and sell it today you would earn a total of 150.00 from holding MUNRE 5875 23 MAY 42 or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 29.6% |
| Values | Daily Returns |
MUNRE 5875 23 MAY 42 vs. Home Depot
Performance |
| Timeline |
| MUNRE 5875 23 |
| Home Depot |
MUNRE and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MUNRE and Home Depot
The main advantage of trading using opposite MUNRE and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MUNRE 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.The idea behind MUNRE 5875 23 MAY 42 and Home Depot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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