This module allows you to analyze existing cross correlation between Home Depot and Alcoa Corporation. You can compare the effects of market volatilities on Home Depot and Alcoa 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 Alcoa. See also your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Alcoa.
|Horizon||30 Days Login to change|
Over the last 30 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Home Depot is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.
Over the last 30 days Alcoa Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2019. The current disturbance may also be a sign of long term up-swing for the company investors.
Home Depot and Alcoa Volatility Contrast
Predicted Return Density
Home Depot Inc vs. Alcoa Corp.
Allowing for the 30-days total investment horizon, Home Depot is expected to generate 0.45 times more return on investment than Alcoa. However, Home Depot is 2.23 times less risky than Alcoa. It trades about -0.02 of its potential returns per unit of risk. Alcoa Corporation is currently generating about -0.17 per unit of risk. If you would invest 21,125 in Home Depot on July 20, 2019 and sell it today you would lose (330.00) from holding Home Depot or give up 1.56% of portfolio value over 30 days.
Pair Corralation between Home Depot and Alcoa
|Time Period||2 Months [change]|
Diversification Opportunities for Home Depot and Alcoa
Overlapping area represents the amount of risk that can be diversified away by holding Home Depot Inc and Alcoa Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alcoa 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 Alcoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa has no effect on the direction of Home Depot i.e. Home Depot and Alcoa go up and down completely randomly.
See also your portfolio center. Please also try Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.