Correlation Between NVIDIA Corp and Home Depot
Can any of the company-specific risk be diversified away by investing in both NVIDIA Corp 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 NVIDIA Corp and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA Corp and Home Depot, you can compare the effects of market volatilities on NVIDIA Corp 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 NVIDIA Corp with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA Corp and Home Depot.
Diversification Opportunities for NVIDIA Corp and Home Depot
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NVIDIA and Home is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA Corp and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and NVIDIA Corp 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 NVIDIA Corp 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 NVIDIA Corp i.e., NVIDIA Corp and Home Depot go up and down completely randomly.
Pair Corralation between NVIDIA Corp and Home Depot
Assuming the 90 days trading horizon NVIDIA Corp is expected to under-perform the Home Depot. In addition to that, NVIDIA Corp is 8.56 times more volatile than Home Depot. It trades about -0.12 of its total potential returns per unit of risk. Home Depot is currently generating about 0.21 per unit of volatility. If you would invest 17,632 in Home Depot on August 30, 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 | 100.0% |
| Values | Daily Returns |
NVIDIA Corp vs. Home Depot
Performance |
| Timeline |
| NVIDIA Corp |
| Home Depot |
NVIDIA Corp and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA Corp and Home Depot
The main advantage of trading using opposite NVIDIA Corp and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA Corp 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.| NVIDIA Corp vs. McEwen Mining | NVIDIA Corp vs. Wheaton Precious Metals | NVIDIA Corp vs. Beowulf Mining | NVIDIA Corp vs. Endeavour Mining Corp |
| Home Depot vs. Sydbank | Home Depot vs. InterContinental Hotels Group | Home Depot vs. Sparebank 1 SR | Home Depot vs. Jupiter Green Investment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |