Correlation Between Home Depot and Alpha Bank
Can any of the company-specific risk be diversified away by investing in both Home Depot and Alpha Bank 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 Alpha Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Alpha Bank SA, you can compare the effects of market volatilities on Home Depot and Alpha Bank 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 Alpha Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Alpha Bank.
Diversification Opportunities for Home Depot and Alpha Bank
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Alpha is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA 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 are associated (or correlated) with Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of Home Depot i.e., Home Depot and Alpha Bank go up and down completely randomly.
Pair Corralation between Home Depot and Alpha Bank
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Alpha Bank. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 1.92 times less risky than Alpha Bank. The stock trades about -0.08 of its potential returns per unit of risk. The Alpha Bank SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Alpha Bank SA on December 26, 2024 and sell it today you would earn a total of 32.00 from holding Alpha Bank SA or generate 84.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Home Depot vs. Alpha Bank SA
Performance |
Timeline |
Home Depot |
Alpha Bank SA |
Home Depot and Alpha Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and Alpha Bank
The main advantage of trading using opposite Home Depot and Alpha Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Alpha Bank 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 Alpha Bank will offset losses from the drop in Alpha Bank's long position.Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies | Home Depot vs. Kirklands |
Alpha Bank vs. National Bank of | Alpha Bank vs. Piraeus Bank SA | Alpha Bank vs. Eurobank Ergasias SA | Alpha Bank vs. First Citizens BancShares |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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