Correlation Between Hostess Brands and Home Depot
Can any of the company-specific risk be diversified away by investing in both Hostess Brands 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 Hostess Brands and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hostess Brands and Home Depot, you can compare the effects of market volatilities on Hostess Brands 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 Hostess Brands with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hostess Brands and Home Depot.
Diversification Opportunities for Hostess Brands and Home Depot
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 1 month correlation between Hostess and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hostess Brands and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Hostess Brands 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 Hostess Brands 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 Hostess Brands i.e., Hostess Brands and Home Depot go up and down completely randomly.
Pair Corralation between Hostess Brands 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 8,833 from holding Home Depot or generate 29.91% return on investment over 90 days.
Time Period | 1 Month [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.2% |
Values | Daily Returns |
Hostess Brands vs. Home Depot
Performance |
Timeline |
Hostess Brands |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Home Depot |
Hostess Brands and Home Depot Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hostess Brands and Home Depot
The main advantage of trading using opposite Hostess Brands and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hostess Brands 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.Hostess Brands vs. Wingstop | Hostess Brands vs. The Wendys Co | Hostess Brands vs. Shake Shack | Hostess Brands vs. Dine Brands Global |
Home Depot vs. Procter Gamble | Home Depot vs. McDonalds | Home Depot vs. Dupont De Nemours | Home Depot vs. Verizon Communications |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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