Correlation Between New Opportunities and Home Depot
Can any of the company-specific risk be diversified away by investing in both New Opportunities 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 New Opportunities and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Opportunities Fund and Home Depot, you can compare the effects of market volatilities on New Opportunities 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 New Opportunities with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Opportunities and Home Depot.
Diversification Opportunities for New Opportunities and Home Depot
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Opportunities Fund and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and New Opportunities 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 New Opportunities Fund 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 New Opportunities i.e., New Opportunities and Home Depot go up and down completely randomly.
Pair Corralation between New Opportunities and Home Depot
If you would invest (100.00) in New Opportunities Fund on January 20, 2024 and sell it today you would earn a total of 100.00 from holding New Opportunities Fund or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
New Opportunities Fund vs. Home Depot
Performance |
| Timeline |
| New Opportunities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Depot |
New Opportunities and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Opportunities and Home Depot
The main advantage of trading using opposite New Opportunities and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Opportunities 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.| New Opportunities vs. John Hancock Financial | New Opportunities vs. Prudential Jennison Financial | New Opportunities vs. 1919 Financial Services | New Opportunities vs. Blackrock Financial Institutions |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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