Correlation Between Aurelia Metals and Home Depot

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

By analyzing existing cross correlation between Aurelia Metals Limited and The Home Depot, you can compare the effects of market volatilities on Aurelia Metals 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 Aurelia Metals with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and Home Depot.

Diversification Opportunities for Aurelia Metals and Home Depot

0.0

Correlation Coefficient

Aurelia Metals  Home Depot

Pay attention - limited upside

The 3 months correlation between Aurelia and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals Limited and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Aurelia Metals 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 Aurelia Metals Limited 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 has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and Home Depot go up and down completely randomly.

Pair Corralation between Aurelia Metals and Home Depot

Assuming the 90 days horizon Aurelia Metals Limited is expected to generate 3.92 times more return on investment than Home Depot. However, Aurelia Metals is 3.92 times more volatile than The Home Depot. It trades about 0.02 of its potential returns per unit of risk. The Home Depot is currently generating about -0.4 per unit of risk. If you would invest  10.00  in Aurelia Metals Limited on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Aurelia Metals Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aurelia Metals Limited  vs.  The Home Depot

Aurelia Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurelia Metals Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurelia Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Home Depot

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Home Depot are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Home Depot is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aurelia Metals and Home Depot

The main advantage of trading using opposite Aurelia Metals and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals 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 Aurelia Metals Limited and The Home Depot 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.