Correlation Between Sabre Corpo and Home Depot
Can any of the company-specific risk be diversified away by investing in both Sabre Corpo 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 Sabre Corpo and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabre Corpo and Home Depot, you can compare the effects of market volatilities on Sabre Corpo 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 Sabre Corpo with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Corpo and Home Depot.
Diversification Opportunities for Sabre Corpo and Home Depot
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sabre and Home is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Sabre Corpo 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 Sabre Corpo 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 Sabre Corpo i.e., Sabre Corpo and Home Depot go up and down completely randomly.
Pair Corralation between Sabre Corpo and Home Depot
Given the investment horizon of 90 days Sabre Corpo is expected to under-perform the Home Depot. In addition to that, Sabre Corpo is 4.03 times more volatile than Home Depot. It trades about -0.15 of its total potential returns per unit of risk. Home Depot is currently generating about -0.07 per unit of volatility. If you would invest 35,457 in Home Depot on January 21, 2024 and sell it today you would lose (1,921) from holding Home Depot or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabre Corpo vs. Home Depot
Performance |
| Timeline |
| Sabre Corpo |
| Home Depot |
Sabre Corpo and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Corpo and Home Depot
The main advantage of trading using opposite Sabre Corpo and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Corpo 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.| Sabre Corpo vs. Palo Alto Networks | Sabre Corpo vs. Zscaler | Sabre Corpo vs. Cloudflare | Sabre Corpo vs. Okta Inc |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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