Correlation Between Evertz Technologies and HOME DEPOT

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

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

Diversification Opportunities for Evertz Technologies and HOME DEPOT

0.66

Correlation Coefficient

Evertz Technologies  HOME DEPOT

Poor diversification

The 3 months correlation between Evertz and HOME is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Evertz Technologies Limited 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 Evertz Technologies 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 Evertz Technologies Limited 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 Evertz Technologies i.e., Evertz Technologies and HOME DEPOT go up and down completely randomly.

Pair Corralation between Evertz Technologies and HOME DEPOT

Assuming the 90 days horizon Evertz Technologies Limited is expected to generate 0.9 times more return on investment than HOME DEPOT. However, Evertz Technologies Limited is 1.12 times less risky than HOME DEPOT. It trades about 0.09 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.01 per unit of risk. If you would invest  1,153  in Evertz Technologies Limited on September 21, 2024 and sell it today you would earn a total of  78.00  from holding Evertz Technologies Limited or generate 6.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Evertz Technologies Limited  vs.  HOME DEPOT CDR

Evertz Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertz Technologies Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evertz Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Evertz Technologies and HOME DEPOT

The main advantage of trading using opposite Evertz Technologies and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertz Technologies 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 Evertz Technologies Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.