Correlation Between Home Depot and COSCO SHIPPING
Can any of the company-specific risk be diversified away by investing in both Home Depot and COSCO SHIPPING 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 COSCO SHIPPING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and COSCO SHIPPING Holdings, you can compare the effects of market volatilities on Home Depot and COSCO SHIPPING 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 COSCO SHIPPING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and COSCO SHIPPING.
Diversification Opportunities for Home Depot and COSCO SHIPPING
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and COSCO is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and COSCO SHIPPING Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Holdings 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 COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Holdings has no effect on the direction of Home Depot i.e., Home Depot and COSCO SHIPPING go up and down completely randomly.
Pair Corralation between Home Depot and COSCO SHIPPING
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the COSCO SHIPPING. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 1.68 times less risky than COSCO SHIPPING. The stock trades about -0.13 of its potential returns per unit of risk. The COSCO SHIPPING Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 542.00 in COSCO SHIPPING Holdings on March 5, 2024 and sell it today you would earn a total of 303.00 from holding COSCO SHIPPING Holdings or generate 55.9% 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. COSCO SHIPPING Holdings
Performance |
Timeline |
Home Depot |
COSCO SHIPPING Holdings |
Home Depot and COSCO SHIPPING Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and COSCO SHIPPING
The main advantage of trading using opposite Home Depot and COSCO SHIPPING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, COSCO SHIPPING 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 COSCO SHIPPING will offset losses from the drop in COSCO SHIPPING's long position.Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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