This module allows you to analyze existing cross correlation between The Home Depot and Citigroup. You can compare the effects of market volatilities on Home Depot and Citigroup 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 Citigroup. See also your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Citigroup.
Allowing for the 30-days total investment horizon, The Home Depot is expected to generate 1.2 times more return on investment than Citigroup. However, Home Depot is 1.2 times more volatile than Citigroup. It trades about 0.2 of its potential returns per unit of risk. Citigroup is currently generating about 0.07 per unit of risk. If you would invest 17,626 in The Home Depot on April 24, 2018 and sell it today you would earn a total of 1,041 from holding The Home Depot or generate 5.91% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot Inc and Citigroup Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 The Home Depot are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Home Depot i.e. Home Depot and Citigroup go up and down completely randomly.
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