Correlation Between HOME DEPOT and ISign Media

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

Diversification Opportunities for HOME DEPOT and ISign Media

0.26

Correlation Coefficient

HOME DEPOT  ISign Media

Modest diversification

The 3 months correlation between HOME and ISign is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and iSign Media Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSign Media Solutions 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 ISign Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSign Media Solutions has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and ISign Media go up and down completely randomly.

Pair Corralation between HOME DEPOT and ISign Media

Assuming the 90 days trading horizon HOME DEPOT is expected to generate 49.45 times less return on investment than ISign Media. But when comparing it to its historical volatility, HOME DEPOT CDR is 36.34 times less risky than ISign Media. It trades about 0.05 of its potential returns per unit of risk. iSign Media Solutions is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.00  in iSign Media Solutions on September 14, 2024 and sell it today you would earn a total of  1,419  from holding iSign Media Solutions or generate 141900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HOME DEPOT CDR  vs.  iSign Media Solutions

HOME DEPOT CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOME DEPOT CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, HOME DEPOT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iSign Media Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iSign Media Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ISign Media 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 ISign Media

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

The idea behind HOME DEPOT CDR and iSign Media Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.