Correlation Between Uber Technologies and Home Depot
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Home Depot, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Home Depot.
Diversification Opportunities for Uber Technologies and Home Depot
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Uber and Home is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Home Depot go up and down completely randomly.
Pair Corralation between Uber Technologies and Home Depot
Assuming the 90 days trading horizon Uber Technologies is expected to generate 1.94 times more return on investment than Home Depot. However, Uber Technologies is 1.94 times more volatile than Home Depot. It trades about 0.09 of its potential returns per unit of risk. Home Depot is currently generating about 0.03 per unit of risk. If you would invest 3,645 in Uber Technologies on September 1, 2024 and sell it today you would earn a total of 3,570 from holding Uber Technologies or generate 97.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.63% |
| Values | Daily Returns |
Uber Technologies vs. Home Depot
Performance |
| Timeline |
| Uber Technologies |
| Home Depot |
Uber Technologies and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Home Depot
The main advantage of trading using opposite Uber Technologies and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. Naturhouse Health SA | Uber Technologies vs. HCA Healthcare | Uber Technologies vs. Inspiration Healthcare Group | Uber Technologies vs. Science in Sport |
| Home Depot vs. CNH Industrial NV | Home Depot vs. Applied Materials | Home Depot vs. Taiwan Semiconductor Manufacturing | Home Depot vs. Neometals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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