Correlation Between HOME DEPOT and Jamieson Wellness

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

Diversification Opportunities for HOME DEPOT and Jamieson Wellness

0.38

Correlation Coefficient

HOME DEPOT  Jamieson Wellness

Weak diversification

The 3 months correlation between HOME and Jamieson is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness 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 Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Jamieson Wellness go up and down completely randomly.

Pair Corralation between HOME DEPOT and Jamieson Wellness

Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 0.92 times more return on investment than Jamieson Wellness. However, HOME DEPOT CDR is 1.09 times less risky than Jamieson Wellness. It trades about 0.05 of its potential returns per unit of risk. Jamieson Wellness is currently generating about 0.01 per unit of risk. If you would invest  2,589  in HOME DEPOT CDR on October 24, 2024 and sell it today you would earn a total of  103.00  from holding HOME DEPOT CDR or generate 3.98% 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.  Jamieson Wellness

HOME DEPOT CDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOME DEPOT CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Jamieson Wellness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jamieson Wellness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HOME DEPOT and Jamieson Wellness

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

The idea behind HOME DEPOT CDR and Jamieson Wellness 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.