Correlation Between Skjern Bank and Home Depot
Can any of the company-specific risk be diversified away by investing in both Skjern Bank 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 Skjern Bank and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skjern Bank AS and Home Depot, you can compare the effects of market volatilities on Skjern Bank 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 Skjern Bank with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skjern Bank and Home Depot.
Diversification Opportunities for Skjern Bank and Home Depot
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Skjern and Home is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Skjern Bank 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 Skjern Bank 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 Skjern Bank i.e., Skjern Bank and Home Depot go up and down completely randomly.
Pair Corralation between Skjern Bank and Home Depot
Assuming the 90 days trading horizon Skjern Bank AS is expected to generate 0.9 times more return on investment than Home Depot. However, Skjern Bank AS is 1.11 times less risky than Home Depot. It trades about -0.11 of its potential returns per unit of risk. Home Depot is currently generating about -0.49 per unit of risk. If you would invest 18,350 in Skjern Bank AS on January 24, 2024 and sell it today you would lose (450.00) from holding Skjern Bank AS or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 90.48% |
Values | Daily Returns |
Skjern Bank AS vs. Home Depot
Performance |
Timeline |
Skjern Bank AS |
Home Depot |
Skjern Bank and Home Depot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Skjern Bank and Home Depot
The main advantage of trading using opposite Skjern Bank and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skjern Bank 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.Skjern Bank vs. Bavarian Nordic | Skjern Bank vs. DSV Panalpina AS | Skjern Bank vs. Vestas Wind Systems | Skjern Bank vs. Ambu AS |
Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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