Correlation Between Fidelity National and Home Depot
Can any of the company-specific risk be diversified away by investing in both Fidelity National 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 Fidelity National and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and Home Depot, you can compare the effects of market volatilities on Fidelity National 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 Fidelity National with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Home Depot.
Diversification Opportunities for Fidelity National and Home Depot
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Home is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and Home Depot go up and down completely randomly.
Pair Corralation between Fidelity National and Home Depot
Assuming the 90 days trading horizon Fidelity National Information is expected to generate 3.94 times more return on investment than Home Depot. However, Fidelity National is 3.94 times more volatile than Home Depot. It trades about 0.03 of its potential returns per unit of risk. Home Depot is currently generating about 0.03 per unit of risk. If you would invest 6,388 in Fidelity National Information on September 20, 2024 and sell it today you would earn a total of 1,893 from holding Fidelity National Information or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fidelity National Information vs. Home Depot
Performance |
| Timeline |
| Fidelity National |
| Home Depot |
Fidelity National and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Home Depot
The main advantage of trading using opposite Fidelity National and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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.| Fidelity National vs. Federal Realty Investment | Fidelity National vs. Zoom Video Communications | Fidelity National vs. New Residential Investment | Fidelity National vs. FC Investment Trust |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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