Correlation Between Home Depot and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Home Depot and Agilent Technologies 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 Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Agilent Technologies, you can compare the effects of market volatilities on Home Depot and Agilent Technologies 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 Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Agilent Technologies.
Diversification Opportunities for Home Depot and Agilent Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Agilent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Home Depot i.e., Home Depot and Agilent Technologies go up and down completely randomly.
Pair Corralation between Home Depot and Agilent Technologies
If you would invest 13,387 in Agilent Technologies on October 24, 2024 and sell it today you would earn a total of 1,910 from holding Agilent Technologies or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Home Depot vs. Agilent Technologies
Performance |
| Timeline |
| Home Depot |
| Agilent Technologies |
Home Depot and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Agilent Technologies
The main advantage of trading using opposite Home Depot and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Home Depot vs. Caledonia Investments | Home Depot vs. Infrastrutture Wireless Italiane | Home Depot vs. mobilezone holding AG | Home Depot vs. Edinburgh Investment Trust |
| Agilent Technologies vs. Home Depot | Agilent Technologies vs. Weiss Korea Opportunity | Agilent Technologies vs. River and Mercantile | Agilent Technologies vs. Chrysalis Investments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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