Correlation Between Kreditbanken and Home Depot
Can any of the company-specific risk be diversified away by investing in both Kreditbanken 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 Kreditbanken and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kreditbanken AS and Home Depot, you can compare the effects of market volatilities on Kreditbanken 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 Kreditbanken with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kreditbanken and Home Depot.
Diversification Opportunities for Kreditbanken and Home Depot
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kreditbanken and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kreditbanken AS and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Kreditbanken 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 Kreditbanken AS 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 Kreditbanken i.e., Kreditbanken and Home Depot go up and down completely randomly.
Pair Corralation between Kreditbanken and Home Depot
Assuming the 90 days trading horizon Kreditbanken is expected to generate 1.02 times less return on investment than Home Depot. But when comparing it to its historical volatility, Kreditbanken AS is 1.14 times less risky than Home Depot. It trades about 0.03 of its potential returns per unit of risk. Home Depot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27,933 in Home Depot on January 26, 2024 and sell it today you would earn a total of 5,368 from holding Home Depot or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kreditbanken AS vs. Home Depot
Performance |
| Timeline |
| Kreditbanken AS |
| Home Depot |
Kreditbanken and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kreditbanken and Home Depot
The main advantage of trading using opposite Kreditbanken and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kreditbanken 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.| Kreditbanken vs. Lollands Bank | Kreditbanken vs. Groenlandsbanken AS | Kreditbanken vs. Skjern Bank AS | Kreditbanken vs. Djurslands Bank |
| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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