Correlation Between HOME DEPOT and Andlauer Healthcare

Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Andlauer Healthcare 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 Andlauer Healthcare 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 Andlauer Healthcare Gr, you can compare the effects of market volatilities on HOME DEPOT and Andlauer Healthcare 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 Andlauer Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Andlauer Healthcare.

Diversification Opportunities for HOME DEPOT and Andlauer Healthcare

-0.14

Correlation Coefficient

HOME DEPOT  Andlauer Healthcare

Good diversification

The 3 months correlation between HOME and Andlauer is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Andlauer Healthcare Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andlauer Healthcare 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 Andlauer Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andlauer Healthcare has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Andlauer Healthcare go up and down completely randomly.

Pair Corralation between HOME DEPOT and Andlauer Healthcare

Assuming the 90 days trading horizon HOME DEPOT CDR is expected to under-perform the Andlauer Healthcare. In addition to that, HOME DEPOT is 1.02 times more volatile than Andlauer Healthcare Gr. It trades about -0.23 of its total potential returns per unit of risk. Andlauer Healthcare Gr is currently generating about 0.05 per unit of volatility. If you would invest  4,290  in Andlauer Healthcare Gr on October 15, 2024 and sell it today you would earn a total of  40.00  from holding Andlauer Healthcare Gr or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HOME DEPOT CDR  vs.  Andlauer Healthcare Gr

HOME DEPOT CDR

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, HOME DEPOT is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Andlauer Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andlauer Healthcare Gr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Andlauer Healthcare may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HOME DEPOT and Andlauer Healthcare

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

The idea behind HOME DEPOT CDR and Andlauer Healthcare Gr 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.