Correlation Between Slate Grocery and HOME DEPOT

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

By analyzing existing cross correlation between Slate Grocery REIT and HOME DEPOT CDR, you can compare the effects of market volatilities on Slate Grocery and HOME DEPOT 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 Slate Grocery with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slate Grocery and HOME DEPOT.

Diversification Opportunities for Slate Grocery and HOME DEPOT

0.78

Correlation Coefficient

Slate Grocery  HOME DEPOT

Poor diversification

The 3 months correlation between Slate and HOME is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Slate Grocery REIT and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR and Slate Grocery 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 Slate Grocery REIT are associated (or correlated) with HOME DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT CDR has no effect on the direction of Slate Grocery i.e., Slate Grocery and HOME DEPOT go up and down completely randomly.

Pair Corralation between Slate Grocery and HOME DEPOT

Assuming the 90 days trading horizon Slate Grocery REIT is expected to under-perform the HOME DEPOT. In addition to that, Slate Grocery is 1.06 times more volatile than HOME DEPOT CDR. It trades about -0.39 of its total potential returns per unit of risk. HOME DEPOT CDR is currently generating about -0.39 per unit of volatility. If you would invest  2,749  in HOME DEPOT CDR on October 6, 2024 and sell it today you would lose (247.00) from holding HOME DEPOT CDR or give up 8.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Slate Grocery REIT  vs.  HOME DEPOT CDR

Slate Grocery REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Grocery REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Slate Grocery is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

HOME DEPOT CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOME DEPOT CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HOME DEPOT is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Slate Grocery and HOME DEPOT

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

The idea behind Slate Grocery REIT and HOME DEPOT CDR 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.