Correlation Between Eros STX and Home Depot

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Can any of the company-specific risk be diversified away by investing in both Eros STX 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 Eros STX and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eros STX Global and Home Depot, you can compare the effects of market volatilities on Eros STX 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 Eros STX with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros STX and Home Depot.

Diversification Opportunities for Eros STX and Home Depot

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Eros and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eros STX Global and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Eros STX 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 Eros STX Global 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 Eros STX i.e., Eros STX and Home Depot go up and down completely randomly.

Pair Corralation between Eros STX and Home Depot

If you would invest  29,527  in Home Depot on December 29, 2023 and sell it today you would earn a total of  9,062  from holding Home Depot or generate 30.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Eros STX Global  vs.  Home Depot

 Performance 
       Timeline  
Eros STX Global 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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Good
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Eros STX and Home Depot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eros STX and Home Depot

The main advantage of trading using opposite Eros STX and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros STX 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 Eros STX Global and 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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