Correlation Between Home Depot and Lind Capital

Can any of the company-specific risk be diversified away by investing in both Home Depot and Lind Capital 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 Lind Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Depot and Lind Capital Partners, you can compare the effects of market volatilities on Home Depot and Lind Capital 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 Lind Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Lind Capital.

Diversification Opportunities for Home Depot and Lind Capital

-0.13

Correlation Coefficient

Home Depot  Lind Capital

Good diversification

The 3 months correlation between Home and Lind is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Lind Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lind Capital Partners 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 Lind Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lind Capital Partners has no effect on the direction of Home Depot i.e., Home Depot and Lind Capital go up and down completely randomly.

Pair Corralation between Home Depot and Lind Capital

Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Lind Capital. In addition to that, Home Depot is 6.56 times more volatile than Lind Capital Partners. It trades about -0.08 of its total potential returns per unit of risk. Lind Capital Partners is currently generating about 0.03 per unit of volatility. If you would invest  872.00  in Lind Capital Partners on December 26, 2024 and sell it today you would earn a total of  3.00  from holding Lind Capital Partners or generate 0.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Home Depot  vs.  Lind Capital Partners

Home Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lind Capital Partners

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lind Capital Partners are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Lind Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and Lind Capital

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

The idea behind Home Depot and Lind Capital Partners 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.