Correlation Between Home Depot and Blackrock World
Can any of the company-specific risk be diversified away by investing in both Home Depot and Blackrock World 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 Home Depot and Blackrock World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Blackrock World Mining, you can compare the effects of market volatilities on Home Depot and Blackrock World 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 Home Depot with a short position of Blackrock World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Blackrock World.
Diversification Opportunities for Home Depot and Blackrock World
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Blackrock is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining and Home Depot 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 Home Depot are associated (or correlated) with Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of Home Depot i.e., Home Depot and Blackrock World go up and down completely randomly.
Pair Corralation between Home Depot and Blackrock World
Assuming the 90 days trading horizon Home Depot is expected to generate 0.12 times more return on investment than Blackrock World. However, Home Depot is 8.68 times less risky than Blackrock World. It trades about 0.13 of its potential returns per unit of risk. Blackrock World Mining is currently generating about -0.11 per unit of risk. If you would invest 17,632 in Home Depot on September 26, 2024 and sell it today you would earn a total of 225.00 from holding Home Depot or generate 1.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Home Depot vs. Blackrock World Mining
Performance |
Timeline |
Home Depot |
Blackrock World Mining |
Home Depot and Blackrock World Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and Blackrock World
The main advantage of trading using opposite Home Depot and Blackrock World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Blackrock World 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 Blackrock World will offset losses from the drop in Blackrock World's long position.Home Depot vs. Samsung Electronics Co | Home Depot vs. Samsung Electronics Co | Home Depot vs. Hyundai Motor | Home Depot vs. Toyota Motor Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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