Correlation Between Home Depot and ATRenew

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

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

Diversification Opportunities for Home Depot and ATRenew

-0.65

Correlation Coefficient

Home Depot  ATRenew

Excellent diversification

The 3 months correlation between Home and ATRenew is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Home Depot i.e., Home Depot and ATRenew go up and down completely randomly.

Pair Corralation between Home Depot and ATRenew

Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 2.91 times less risky than ATRenew. The stock trades about -0.07 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  289.00  in ATRenew Inc DRC on December 28, 2024 and sell it today you would earn a total of  26.00  from holding ATRenew Inc DRC or generate 9.0% 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.  ATRenew Inc DRC

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

ATRenew Inc DRC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATRenew Inc DRC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ATRenew exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Depot and ATRenew

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

The idea behind Home Depot and ATRenew Inc DRC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.