Correlation Between Home Depot and NFT Gaming

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

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

Diversification Opportunities for Home Depot and NFT Gaming

-0.51

Correlation Coefficient

Home Depot  NFT Gaming

Excellent diversification

The 3 months correlation between Home and NFT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and The NFT Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFT Gaming 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 NFT Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFT Gaming has no effect on the direction of Home Depot i.e., Home Depot and NFT Gaming go up and down completely randomly.

Pair Corralation between Home Depot and NFT Gaming

If you would invest  36,276  in Home Depot on September 4, 2024 and sell it today you would earn a total of  6,420  from holding Home Depot or generate 17.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Home Depot  vs.  The NFT Gaming

Home Depot

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Home Depot exhibited solid returns over the last few months and may actually be approaching a breakup point.

NFT Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The NFT Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NFT Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Home Depot and NFT Gaming

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

The idea behind Home Depot and The NFT Gaming 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.