Correlation Between Home Capital and EDreams Odigeo

Can any of the company-specific risk be diversified away by investing in both Home Capital and EDreams Odigeo 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 Capital and EDreams Odigeo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Capital Rentals and eDreams Odigeo SA, you can compare the effects of market volatilities on Home Capital and EDreams Odigeo 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 Capital with a short position of EDreams Odigeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Capital and EDreams Odigeo.

Diversification Opportunities for Home Capital and EDreams Odigeo

0.63

Correlation Coefficient

Home Capital  EDreams Odigeo

Poor diversification

The 3 months correlation between Home and EDreams is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Home Capital Rentals and eDreams Odigeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eDreams Odigeo SA and Home Capital 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 Capital Rentals are associated (or correlated) with EDreams Odigeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eDreams Odigeo SA has no effect on the direction of Home Capital i.e., Home Capital and EDreams Odigeo go up and down completely randomly.

Pair Corralation between Home Capital and EDreams Odigeo

Assuming the 90 days trading horizon Home Capital is expected to generate 21.25 times less return on investment than EDreams Odigeo. But when comparing it to its historical volatility, Home Capital Rentals is 21.55 times less risky than EDreams Odigeo. It trades about 0.12 of its potential returns per unit of risk. eDreams Odigeo SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  719.00  in eDreams Odigeo SA on April 22, 2025 and sell it today you would earn a total of  114.00  from holding eDreams Odigeo SA or generate 15.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Home Capital Rentals  vs.  eDreams Odigeo SA

Home Capital Rentals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Capital Rentals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Home Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

eDreams Odigeo SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eDreams Odigeo SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EDreams Odigeo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Capital and EDreams Odigeo

The main advantage of trading using opposite Home Capital and EDreams Odigeo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Capital position performs unexpectedly, EDreams Odigeo 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 EDreams Odigeo will offset losses from the drop in EDreams Odigeo's long position.

The idea behind Home Capital Rentals and eDreams Odigeo SA 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.