Correlation Between Home Depot and AgileThought

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

By analyzing existing cross correlation between Home Depot and AgileThought, you can compare the effects of market volatilities on Home Depot and AgileThought 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 AgileThought. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and AgileThought.

Diversification Opportunities for Home Depot and AgileThought

-0.82

Correlation Coefficient

Home Depot  AgileThought

Pay attention - limited upside

The 3 months correlation between Home and AgileThought is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and AgileThought in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgileThought 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 AgileThought. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgileThought has no effect on the direction of Home Depot i.e., Home Depot and AgileThought go up and down completely randomly.

Pair Corralation between Home Depot and AgileThought

Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.2 times more return on investment than AgileThought. However, Home Depot is 5.1 times less risky than AgileThought. It trades about 0.05 of its potential returns per unit of risk. AgileThought is currently generating about -0.09 per unit of risk. If you would invest  31,665  in Home Depot on September 4, 2024 and sell it today you would earn a total of  11,031  from holding Home Depot or generate 34.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	30.71%
Values	Daily Returns

Home Depot  vs.  AgileThought

Home Depot

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Home Depot exhibited solid returns over the last few months and may actually be approaching a breakup point.

AgileThought

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgileThought has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, AgileThought is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Home Depot and AgileThought

The main advantage of trading using opposite Home Depot and AgileThought positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, AgileThought 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 AgileThought will offset losses from the drop in AgileThought's long position.

The idea behind Home Depot and AgileThought 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.