Correlation Between Home Depot and Postal Svgs

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

Diversification Opportunities for Home Depot and Postal Svgs

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Home Depot and Postal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Postal Svgs Bk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Svgs Bk and Home Depot 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 Home Depot are associated (or correlated) with Postal Svgs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Svgs Bk has no effect on the direction of Home Depot i.e., Home Depot and Postal Svgs go up and down completely randomly.

Pair Corralation between Home Depot and Postal Svgs

Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.21 times less return on investment than Postal Svgs. But when comparing it to its historical volatility, Home Depot is 2.8 times less risky than Postal Svgs. It trades about 0.03 of its potential returns per unit of risk. Postal Svgs Bk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,098  in Postal Svgs Bk on May 13, 2022 and sell it today you would earn a total of  103.00  from holding Postal Svgs Bk or generate 9.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Home Depot  vs.  Postal Svgs Bk

 Performance (%) 
       Timeline  
Home Depot 
Home Depot Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Home Depot Price Channel

Postal Svgs Bk 
Postal Performance
0 of 100
Over the last 90 days Postal Svgs Bk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Postal Price Channel

Home Depot and Postal Svgs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and Postal Svgs

The main advantage of trading using opposite Home Depot and Postal Svgs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Postal Svgs 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 Postal Svgs will offset losses from the drop in Postal Svgs' long position.
The idea behind Home Depot and Postal Svgs Bk 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.

Postal Svgs Bk

Pair trading matchups for Postal Svgs

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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