Correlation Between WICKES GROUP and Home Depot
Can any of the company-specific risk be diversified away by investing in both WICKES GROUP 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 WICKES GROUP and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WICKES GROUP PLC and The Home Depot, you can compare the effects of market volatilities on WICKES GROUP 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 WICKES GROUP with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of WICKES GROUP and Home Depot.
Diversification Opportunities for WICKES GROUP and Home Depot
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WICKES and Home is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding WICKES GROUP PLC and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and WICKES GROUP 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 WICKES GROUP PLC 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 WICKES GROUP i.e., WICKES GROUP and Home Depot go up and down completely randomly.
Pair Corralation between WICKES GROUP and Home Depot
Assuming the 90 days horizon WICKES GROUP PLC is expected to under-perform the Home Depot. But the stock apears to be less risky and, when comparing its historical volatility, WICKES GROUP PLC is 1.08 times less risky than Home Depot. The stock trades about -0.3 of its potential returns per unit of risk. The The Home Depot is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 35,850 in The Home Depot on September 1, 2024 and sell it today you would earn a total of 4,885 from holding The Home Depot or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
WICKES GROUP PLC vs. The Home Depot
Performance |
| Timeline |
| WICKES GROUP PLC |
| Home Depot |
WICKES GROUP and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WICKES GROUP and Home Depot
The main advantage of trading using opposite WICKES GROUP and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WICKES GROUP 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.| WICKES GROUP vs. CapitaLand Investment Limited | WICKES GROUP vs. PennyMac Mortgage Investment | WICKES GROUP vs. Jacquet Metal Service | WICKES GROUP vs. LION ONE METALS |
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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 Stocks Directory module to find actively traded stocks across global markets.
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