Correlation Between Zegona Communications and Home Depot
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Home Depot, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Home Depot.
Diversification Opportunities for Zegona Communications and Home Depot
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zegona and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Zegona Communications 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 Zegona Communications 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 Zegona Communications i.e., Zegona Communications and Home Depot go up and down completely randomly.
Pair Corralation between Zegona Communications and Home Depot
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 17.54 times more return on investment than Home Depot. However, Zegona Communications is 17.54 times more volatile than Home Depot. It trades about 0.05 of its potential returns per unit of risk. Home Depot is currently generating about 0.03 per unit of risk. If you would invest 7,950 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 25,050 from holding Zegona Communications Plc or generate 315.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.7% |
| Values | Daily Returns |
Zegona Communications Plc vs. Home Depot
Performance |
| Timeline |
| Zegona Communications Plc |
| Home Depot |
Zegona Communications and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and Home Depot
The main advantage of trading using opposite Zegona Communications and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
| Home Depot vs. Tyson Foods Cl | Home Depot vs. Zegona Communications Plc | Home Depot vs. GreenX Metals | Home Depot vs. Gamma Communications PLC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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