Correlation Between Atrium Mortgage and HOME DEPOT

Can any of the company-specific risk be diversified away by investing in both Atrium Mortgage 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 Atrium Mortgage and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atrium Mortgage Investment and HOME DEPOT CDR, you can compare the effects of market volatilities on Atrium Mortgage 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 Atrium Mortgage with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atrium Mortgage and HOME DEPOT.

Diversification Opportunities for Atrium Mortgage and HOME DEPOT

0.32

Correlation Coefficient

Atrium Mortgage  HOME DEPOT

Weak diversification

The 3 months correlation between Atrium and HOME is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Mortgage 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 Atrium Mortgage 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 Atrium Mortgage 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 Atrium Mortgage i.e., Atrium Mortgage and HOME DEPOT go up and down completely randomly.

Pair Corralation between Atrium Mortgage and HOME DEPOT

Assuming the 90 days horizon Atrium Mortgage Investment is expected to under-perform the HOME DEPOT. But the stock apears to be less risky and, when comparing its historical volatility, Atrium Mortgage Investment is 2.26 times less risky than HOME DEPOT. The stock trades about -0.1 of its potential returns per unit of risk. The HOME DEPOT CDR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,523  in HOME DEPOT CDR on September 21, 2024 and sell it today you would earn a total of  4.00  from holding HOME DEPOT CDR or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Atrium Mortgage Investment  vs.  HOME DEPOT CDR

Atrium Mortgage Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Mortgage Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atrium Mortgage is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HOME DEPOT CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HOME DEPOT is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Atrium Mortgage and HOME DEPOT

The main advantage of trading using opposite Atrium Mortgage and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atrium Mortgage 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 Atrium Mortgage Investment and HOME DEPOT CDR 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.