Correlation Between Home Depot and Oxford Square

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

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

Diversification Opportunities for Home Depot and Oxford Square

0.0

Correlation Coefficient

Home Depot  Oxford Square

Pay attention - limited upside

The 3 months correlation between Home and Oxford is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Oxford Square Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Square Capital 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 Oxford Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Square Capital has no effect on the direction of Home Depot i.e., Home Depot and Oxford Square go up and down completely randomly.

Pair Corralation between Home Depot and Oxford Square

If you would invest  33,330  in Home Depot on October 7, 2024 and sell it today you would earn a total of  5,588  from holding Home Depot or generate 16.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Home Depot  vs.  Oxford Square Capital

Home Depot

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oxford Square Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Square Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oxford Square is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Home Depot and Oxford Square

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

The idea behind Home Depot and Oxford Square Capital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..