Correlation Between Home Depot and Surgalign Holdings

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

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

Diversification Opportunities for Home Depot and Surgalign Holdings

-0.71

Correlation Coefficient

Home Depot  Surgalign Holdings

Pay attention - limited upside

The 3 months correlation between Home and Surgalign is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Surgalign Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgalign Holdings 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 Surgalign Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgalign Holdings has no effect on the direction of Home Depot i.e., Home Depot and Surgalign Holdings go up and down completely randomly.

Pair Corralation between Home Depot and Surgalign Holdings

If you would invest  40,604  in Home Depot on September 16, 2024 and sell it today you would earn a total of  1,094  from holding Home Depot or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Home Depot  vs.  Surgalign Holdings

Home Depot

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Surgalign Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgalign Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Surgalign Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and Surgalign Holdings

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

The idea behind Home Depot and Surgalign Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.