Correlation Between HOME DEPOT and Opus One

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

Diversification Opportunities for HOME DEPOT and Opus One

0.27

Correlation Coefficient

HOME DEPOT  Opus One

Modest diversification

The 3 months correlation between HOME and Opus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Opus One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opus One Resources 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 Opus One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opus One Resources has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Opus One go up and down completely randomly.

Pair Corralation between HOME DEPOT and Opus One

If you would invest  2,531  in HOME DEPOT CDR on October 22, 2024 and sell it today you would earn a total of  105.00  from holding HOME DEPOT CDR or generate 4.15% 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.  Opus One Resources

HOME DEPOT CDR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HOME DEPOT CDR are ranked lower than 2 (%) 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.

Opus One Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Opus One Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Opus One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOME DEPOT and Opus One

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

The idea behind HOME DEPOT CDR and Opus One Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.