Correlation Between Marchex and 437076AS1

Can any of the company-specific risk be diversified away by investing in both Marchex and 437076AS1 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 Marchex and 437076AS1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marchex and HOME DEPOT INC, you can compare the effects of market volatilities on Marchex and 437076AS1 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 Marchex with a short position of 437076AS1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and 437076AS1.

Diversification Opportunities for Marchex and 437076AS1

0.23

Correlation Coefficient

Marchex  437076AS1

Modest diversification

The 3 months correlation between Marchex and 437076AS1 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC and Marchex 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 Marchex are associated (or correlated) with 437076AS1. 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 INC has no effect on the direction of Marchex i.e., Marchex and 437076AS1 go up and down completely randomly.

Pair Corralation between Marchex and 437076AS1

Given the investment horizon of 90 days Marchex is expected to generate 3.72 times more return on investment than 437076AS1. However, Marchex is 3.72 times more volatile than HOME DEPOT INC. It trades about 0.01 of its potential returns per unit of risk. HOME DEPOT INC is currently generating about -0.1 per unit of risk. If you would invest  178.00  in Marchex on September 5, 2024 and sell it today you would lose (2.00) from holding Marchex or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Marchex  vs.  HOME DEPOT INC

Marchex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HOME DEPOT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076AS1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marchex and 437076AS1

The main advantage of trading using opposite Marchex and 437076AS1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marchex position performs unexpectedly, 437076AS1 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 437076AS1 will offset losses from the drop in 437076AS1's long position.

The idea behind Marchex and HOME DEPOT INC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.