Correlation Between Homeland Resources and TrueCar

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

By analyzing existing cross correlation between Homeland Resources and TrueCar, you can compare the effects of market volatilities on Homeland Resources and TrueCar 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 Homeland Resources with a short position of TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homeland Resources and TrueCar.

Diversification Opportunities for Homeland Resources and TrueCar

0.66

Correlation Coefficient

Homeland Resources  TrueCar

Poor diversification

The 3 months correlation between Homeland and TrueCar is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Homeland Resources and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and Homeland Resources 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 Homeland Resources are associated (or correlated) with TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Homeland Resources i.e., Homeland Resources and TrueCar go up and down completely randomly.

Pair Corralation between Homeland Resources and TrueCar

Given the investment horizon of 90 days Homeland Resources is not expected to generate positive returns. Moreover, Homeland Resources is 4.96 times more volatile than TrueCar. It trades away all of its potential returns to assume current level of volatility. TrueCar is currently generating about -0.3 per unit of risk. If you would invest  0.03  in Homeland Resources on December 27, 2024 and sell it today you would lose (0.02) from holding Homeland Resources or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Homeland Resources  vs.  TrueCar

Homeland Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Homeland Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Homeland Resources is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

TrueCar

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueCar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Homeland Resources and TrueCar

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

The idea behind Homeland Resources and TrueCar 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.