Correlation Between Home Capital and General De
Can any of the company-specific risk be diversified away by investing in both Home Capital and General De 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 Capital and General De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Capital Rentals and General de Alquiler, you can compare the effects of market volatilities on Home Capital and General De 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 Capital with a short position of General De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and General De.
Diversification Opportunities for Home Capital and General De
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and General is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and General de Alquiler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General de Alquiler and Home Capital 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 Capital Rentals are associated (or correlated) with General De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General de Alquiler has no effect on the direction of Home Capital i.e., Home Capital and General De go up and down completely randomly.
Pair Corralation between Home Capital and General De
Assuming the 90 days trading horizon Home Capital Rentals is expected to under-perform the General De. But the stock apears to be less risky and, when comparing its historical volatility, Home Capital Rentals is 1.89 times less risky than General De. The stock trades about -0.12 of its potential returns per unit of risk. The General de Alquiler is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 121.00 in General de Alquiler on September 14, 2024 and sell it today you would earn a total of 11.00 from holding General de Alquiler or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Home Capital Rentals vs. General de Alquiler
Performance |
Timeline |
Home Capital Rentals |
General de Alquiler |
Home Capital and General De Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Capital and General De
The main advantage of trading using opposite Home Capital and General De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, General De 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 General De will offset losses from the drop in General De's long position.Home Capital vs. Airbus Group SE | Home Capital vs. Industria de Diseno | Home Capital vs. Vale SA | Home Capital vs. Iberdrola SA |
General De vs. NH Hoteles | General De vs. Home Capital Rentals | General De vs. Borges Agricultural Industrial | General De vs. Aedas Homes SL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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