Correlation Between Home Depot and State Bank
Can any of the company-specific risk be diversified away by investing in both Home Depot and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and State Bank of, you can compare the effects of market volatilities on Home Depot and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and State Bank.
Diversification Opportunities for Home Depot and State Bank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and State is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Home Depot i.e., Home Depot and State Bank go up and down completely randomly.
Pair Corralation between Home Depot and State Bank
If you would invest 9,470 in State Bank of on August 25, 2024 and sell it today you would earn a total of 180.00 from holding State Bank of or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. State Bank of
Performance |
| Timeline |
| Home Depot |
| State Bank |
Home Depot and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and State Bank
The main advantage of trading using opposite Home Depot and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Home Depot vs. Fulcrum Metals PLC | Home Depot vs. European Metals Holdings | Home Depot vs. Sovereign Metals | Home Depot vs. Adriatic Metals |
| State Bank vs. Home Depot | State Bank vs. River and Mercantile | State Bank vs. Chrysalis Investments | State Bank vs. Sherborne Investors Guernsey |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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