Correlation Between HOME DEPOT and Storage Vault

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

Diversification Opportunities for HOME DEPOT and Storage Vault

-0.43

Correlation Coefficient

HOME DEPOT  Storage Vault

Very good diversification

The 3 months correlation between HOME and Storage is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Storage Vault Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storage Vault Canada 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 Storage Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storage Vault Canada has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Storage Vault go up and down completely randomly.

Pair Corralation between HOME DEPOT and Storage Vault

Assuming the 90 days trading horizon HOME DEPOT CDR is expected to generate 0.6 times more return on investment than Storage Vault. However, HOME DEPOT CDR is 1.66 times less risky than Storage Vault. It trades about 0.31 of its potential returns per unit of risk. Storage Vault Canada is currently generating about -0.01 per unit of risk. If you would invest  2,524  in HOME DEPOT CDR on August 31, 2024 and sell it today you would earn a total of  261.00  from holding HOME DEPOT CDR or generate 10.34% return on investment over 90 days.

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

HOME DEPOT CDR  vs.  Storage Vault Canada

HOME DEPOT CDR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HOME DEPOT CDR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, HOME DEPOT displayed solid returns over the last few months and may actually be approaching a breakup point.

Storage Vault Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Storage Vault Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HOME DEPOT and Storage Vault

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

The idea behind HOME DEPOT CDR and Storage Vault Canada 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.