Correlation Between 437076AS1 and Marchex

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

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

Diversification Opportunities for 437076AS1 and Marchex

0.23

Correlation Coefficient

437076AS1  Marchex

Modest diversification

The 3 months correlation between 437076AS1 and Marchex is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT INC and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and 437076AS1 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 INC are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of 437076AS1 i.e., 437076AS1 and Marchex go up and down completely randomly.

Pair Corralation between 437076AS1 and Marchex

Assuming the 90 days trading horizon HOME DEPOT INC is expected to under-perform the Marchex. But the bond apears to be less risky and, when comparing its historical volatility, HOME DEPOT INC is 3.72 times less risky than Marchex. The bond trades about -0.1 of its potential returns per unit of risk. The Marchex is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

HOME DEPOT INC  vs.  Marchex

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.

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.

Pair Trading with 437076AS1 and Marchex

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

The idea behind HOME DEPOT INC and Marchex 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..