Correlation Between Home Depot and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Home Depot and Fortune Brands 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 Depot and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Fortune Brands Home, you can compare the effects of market volatilities on Home Depot and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Fortune Brands.
Diversification Opportunities for Home Depot and Fortune Brands
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Fortune is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Home Depot i.e., Home Depot and Fortune Brands go up and down completely randomly.
Pair Corralation between Home Depot and Fortune Brands
If you would invest 17,857 in Home Depot on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Home Depot or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Home Depot vs. Fortune Brands Home
Performance |
| Timeline |
| Home Depot |
| Fortune Brands Home |
Home Depot and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Fortune Brands
The main advantage of trading using opposite Home Depot and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Home Depot vs. Alien Metals | Home Depot vs. Wyndham Hotels Resorts | Home Depot vs. European Metals Holdings | Home Depot vs. URU Metals |
| Fortune Brands vs. Darden Restaurants | Fortune Brands vs. Creo Medical Group | Fortune Brands vs. Gamma Communications PLC | Fortune Brands vs. Verizon Communications |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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