Correlation Between Western Investment and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Western Investment 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 Western Investment and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and HOME DEPOT CDR, you can compare the effects of market volatilities on Western Investment 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 Western Investment with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and HOME DEPOT.
Diversification Opportunities for Western Investment and HOME DEPOT
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and HOME is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR and Western Investment 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 Western Investment 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 CDR has no effect on the direction of Western Investment i.e., Western Investment and HOME DEPOT go up and down completely randomly.
Pair Corralation between Western Investment and HOME DEPOT
Given the investment horizon of 90 days Western Investment is expected to generate 3.0 times more return on investment than HOME DEPOT. However, Western Investment is 3.0 times more volatile than HOME DEPOT CDR. It trades about 0.04 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.04 per unit of risk. If you would invest 39.00 in Western Investment on October 25, 2024 and sell it today you would earn a total of 20.00 from holding Western Investment or generate 51.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. HOME DEPOT CDR
Performance |
| Timeline |
| Western Investment |
| HOME DEPOT CDR |
Western Investment and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and HOME DEPOT
The main advantage of trading using opposite Western Investment and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment 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.| Western Investment vs. Highwood Asset Management | Western Investment vs. Mako Mining Corp | Western Investment vs. Pace Metals | Western Investment vs. T2 Metals Corp |
| HOME DEPOT vs. InPlay Oil Corp | HOME DEPOT vs. Western Copper and | HOME DEPOT vs. XXIX Metal Corp | HOME DEPOT vs. Western Investment |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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