Correlation Between Home Depot and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Home Depot and Intermediate Capital 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 Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Intermediate Capital Group, you can compare the effects of market volatilities on Home Depot and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Intermediate Capital.
Diversification Opportunities for Home Depot and Intermediate Capital
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Intermediate is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Home Depot i.e., Home Depot and Intermediate Capital go up and down completely randomly.
Pair Corralation between Home Depot and Intermediate Capital
Assuming the 90 days trading horizon Home Depot is expected to generate 0.08 times more return on investment than Intermediate Capital. However, Home Depot is 12.04 times less risky than Intermediate Capital. It trades about 0.12 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.01 per unit of risk. If you would invest 17,632 in Home Depot on September 2, 2024 and sell it today you would earn a total of 225.00 from holding Home Depot or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
Home Depot vs. Intermediate Capital Group
Performance |
| Timeline |
| Home Depot |
| Intermediate Capital |
Home Depot and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Intermediate Capital
The main advantage of trading using opposite Home Depot and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Home Depot vs. Livermore Investments Group | Home Depot vs. Extra Space Storage | Home Depot vs. TR Property Investment | Home Depot vs. Axway Software SA |
| Intermediate Capital vs. Scandinavian Tobacco Group | Intermediate Capital vs. Southern Copper Corp | Intermediate Capital vs. Trainline Plc | Intermediate Capital vs. Bisichi Mining PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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