Correlation Between HOME DEPOT and Aftermath Silver

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

By analyzing existing cross correlation between HOME DEPOT CDR and Aftermath Silver, you can compare the effects of market volatilities on HOME DEPOT and Aftermath Silver 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 Aftermath Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Aftermath Silver.

Diversification Opportunities for HOME DEPOT and Aftermath Silver

0.18

Correlation Coefficient

HOME DEPOT  Aftermath Silver

Average diversification

The 3 months correlation between HOME and Aftermath is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Aftermath Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermath Silver 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 CDR are associated (or correlated) with Aftermath Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermath Silver has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Aftermath Silver go up and down completely randomly.

Pair Corralation between HOME DEPOT and Aftermath Silver

Assuming the 90 days trading horizon HOME DEPOT CDR is expected to under-perform the Aftermath Silver. But the stock apears to be less risky and, when comparing its historical volatility, HOME DEPOT CDR is 3.69 times less risky than Aftermath Silver. The stock trades about -0.12 of its potential returns per unit of risk. The Aftermath Silver is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Aftermath Silver on December 3, 2024 and sell it today you would lose (3.00) from holding Aftermath Silver or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

HOME DEPOT CDR  vs.  Aftermath Silver

HOME DEPOT CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOME DEPOT CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aftermath Silver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aftermath Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aftermath Silver is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HOME DEPOT and Aftermath Silver

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

The idea behind HOME DEPOT CDR and Aftermath Silver 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.