Correlation Between Home Depot and Jackpot Digital

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Home Depot and Jackpot Digital 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 Jackpot Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Jackpot Digital, you can compare the effects of market volatilities on Home Depot and Jackpot Digital 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 Jackpot Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Jackpot Digital.

Diversification Opportunities for Home Depot and Jackpot Digital

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Home and Jackpot is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of Home Depot i.e., Home Depot and Jackpot Digital go up and down completely randomly.

Pair Corralation between Home Depot and Jackpot Digital

Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.97 times less return on investment than Jackpot Digital. But when comparing it to its historical volatility, Home Depot is 4.85 times less risky than Jackpot Digital. It trades about 0.06 of its potential returns per unit of risk. Jackpot Digital is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6.06  in Jackpot Digital on September 6, 2024 and sell it today you would lose (1.36) from holding Jackpot Digital or give up 22.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Home Depot  vs.  Jackpot Digital

 Performance 
       Timeline  
Home Depot 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 19 (%) 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.
Jackpot Digital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Jackpot Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Jackpot Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Home Depot and Jackpot Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and Jackpot Digital

The main advantage of trading using opposite Home Depot and Jackpot Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Jackpot Digital 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 Jackpot Digital will offset losses from the drop in Jackpot Digital's long position.
The idea behind Home Depot and Jackpot Digital 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing